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Monday, July 16, 2007
Mid-Year Real Estate Outlook – 2007
Mid-Year Real Estate Outlook – 2007
“Still in Neutral”
by Gary Watts
Gary Watts’ forecast for 2007 marks the 34th year of bringing to the real estate industry his outlook for the resale housing market. Since Gary speaks only to the real estate industry, his information is presented in a format that real estate agents can use to inform their clients. His forecasting analysis includes both the current marketplace and where housing demand and pricing will likely to be heading. In the 1970’s he forecasted trends, in the 1980’s he began forecasting the direction of home prices which included his now famous 1989 talk The Party is Over. In the mid 1990’s, he gave the signal to the real estate industry that the bad times were over and in this new millennium, Gary began forecasting home price appreciation rates. His forecast versus the actual appreciation numbers are listed below. Although we are enduring the “hang-over” from the 2003 & 2004 “wild party years” (which includes the present problems in the sub-prime market and increasing foreclosures), Gary still does not see any economic signs, that will cause any major price changes for most of the Southern California housing market – other than remaining in a “neutral position”.
For the record, here are his numbers compared to actual numbers since 2000:
2000 2001 2002 2003 2004 2005 2006 Totals: 2007
Forecast: 12.5% 12.0% 10.0% 15.0% 25.0% 15.0% 15.0% 102.5% 7%
Actual: 13.0% 10.1% 16.8% 19.1% 24.8% 16.5% 3.4% * 104.1% 4.6%
(1st Q. ’07)
Another Bad Year for the Pundits!
Their Forecast for 2006:
One would think that with all the economic data readily available, forecasters would be able to do a better job of forecasting than they do. Each month we know the numbers for employment, gross domestic product growth, interest rates, housing supply and sales, consumer spending, inflation, wholesale costs, crude oil prices, population growth and the status of world economies – just to name a few! These all have an impact on housing and yet, with all this information, they still miss the direction and strength of the U.S. housing market . . . and they have been missing their mark for decades!
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The
typical new house today costs about $28,000.” – Business Week, 1969
“The median price of a home today is approaching $50,000 . . . housing experts predict price rises in
the future won’t be that great.” – National Business, 1977
“The golden-age of risk free run-ups in home prices is gone.” - Money Magazine, 1985
“A home is where the bad investment is.” – San Francisco Examiner, 1996.
Today’s Headlines!
♦ The Housing Bubble Will Burst!
Their first forecast for a bubble was in 2002 and it still has not happened. So much for the Great
American Housing Collapse . . . and you won’t see it in 2007 either! Appreciation rate for the
1st quarter in southern California was 4.6%!
♦ The Correction Phase for Housing Will Be Devastating!
Although there was some speculative over-building in certain areas of the U.S., most of the U.S. housing
market weathered this change without blood running in the streets, as some bubble-bears had forecasted.
♦ Real Estate Prices Will Plummet!
Nationally, home prices ended the year by appreciating between a low of 1.9% to a high of 5.9%, depending upon
which indicator was used. Last year, buyers acquired 1.06 million new and 6.48 million resale homes.
These numbers may have exceed any other time in the history of the U.S., except from mid-2003 to mid-2005.
♦ Foreclosures Reach Record Highs!
What record? Foreclosures are near a record low. Last year, only 1.09% of mortgages went to foreclosure.
That means 98.91% percent of the buyers are making their payments! Today, foreclosures are grabbing the
headlines but the truth is that most foreclosures are due to fraud and unethical lending. That is followed by
medical reasons and then loss of a job. Most of the loans going into foreclosure are from February of 2005
to May of 2006. Today, over 97% of all homeowners are still making their house payments! In California,
the media loves to report record Notices of Default but the fact is that they are not even close to our record
high set in 1996. If you add in the fact that we have built almost 2 million more homes in this State since than,
the percentage is ridiculously low!
♦ Affordability Index at Record Low – This has been their mantra for decades!
Homeownership is at a record high of 69%, with the baby boomers’ ownership at 80%! This affordability
index is archaic and does not account for a world that changed dramatically in 1979!
Source: National Home Builders Association and the National Association of Realtors
Why The World Changed in 1979!
Baby Boomers’ Impact
Never before in the history of the world has a generation accumulated so much wealth as the baby boomers. The Internal Revenue Service will tell you that from 1945 to 1979, incomes increased at the same rate for all tax brackets. By 1979, the early baby boomers had been in the workplace for over 10 years. They were the most educated generation to enter the work force, and they had the skills for our changing world. Today, the IRS tells us that, from 1979 to 2004, the median income in the U.S. rose 18% but . . .
♦ The top 20% of incomes grew by 59%, while the bottom 20% of incomes grew by a measly 7%!
♦ The top 1% of incomes grew by 200% - earning more than the entire bottom 50% of wage earners!
♦ Today, the top 10% of wage earners receives 45% of all household income.
♦ The top 85% of the nation’s wealth resides with the richest 15% of Americans; the bottom 50% of
Americans holds only 2.5% of the nation’s wealth.
Over the next decade, there will be a 25% increase in the population over 50 years of age. They have more money than any preceding generation, due to having dual incomes, equity growth, and record inheritances (60% goes to the top 40%)! This age group is spending $2 trillion dollars annually! Last year, 2.1 million boomers turned 60, with 25% planning on not retiring. They found a way to mix leisure with work and are not ready to fully retire – they have money and income and they are still investing in real estate.
They are part of a major buying wave, as 75% plan on moving to either the west or the south for warmth. Already, 80% own their own home with 25% of those owning additional property. This helps to explain why, in 2005, 27.7% of all sales were for investment purchases and 12.2% of all sales were for 2nd homes!
Those Who Own and Those Who Don’t
1. We are the youngest of the home-building nations. History does repeat itself! Every country has gone through a cycle whereby it breaks into two parts: those who own a home and those who don’t.
2. When this happens, rental rates begin to soar. We are in the beginning cycle of this event, as evidenced by the fact that the national rental rate increased 5.3% in the last 12 months. Since 2001, the rise in rental rates has easily outpaced inflation.
3. Obviously this becomes a great benefit to those who own homes and rental properties – especially when the U.S. occupancy rate is now at 96.2%!
4. The United States is unique among developing countries – we are still growing! Last year our population surpassed the 300 million mark as we added another 2.9 million people. This makes us the 3rd most populous nation in the world, behind China and India. Since 2000, we have added 20 million individuals and by 2030, there will be 80 million more people living in America!
Source: 2004/2005 Census, U.S. Bureau of Labor Statistics
Just How Rich Are We . . .
There are now 2.9 million millionaires in North America, holding $10.2 trillion in assets. There are 317 billionaires in the U.S. holding $1.1 trillion in assets. California is home to 90 billionaires!
The Federal Reserve reports:
· Consumers have $5 trillion dollars in liquid cash sitting in banks and savings and loans!
· In 2006, households’ net worth rose 7.4% and now exceeds $55.6 trillion dollars!
· Homeowners real estate equity is $10.9 trillion dollars – representing a 59% equity position!
· The value of individual stocks and mutual funds held by individuals grew to $10.4 trillion dollars!
· Other assets held by individuals include:
$ 3.2 trillion in bonds and credit instruments
$ 1.1 trillion in insurance reserves
$ 6.7 trillion of equity in non-corporate businesses
$11.1 trillion in pension funds
$ 2.5 trillion in 401K’s – plus $10 billion in loose change in homes and cars!
What Are They Doing With This Wealth?
They or their parents are also in the process of transferring their wealth to their children and grandchildren. These newest home buyers make up the largest group of the 3 buying waves. They are presently 23 to 33 years
of age, and will add 1.2 million new households per year for the next decade! They are purchasing at a median age of 26, yet those purchasing under 25 years of age now represent 14% of the first time home buyers market.
And let us not forget the wave of buyers that represent the normal buying market. This group is projected to grow at a rate of 1.17 million per year for the next 7 years. They include 1st time home buyers (median age 29) and those purchasing upscale homes (median age 45).
Impact of Immigration
Add to this the immigrants purchasing real estate and you can see that the U.S. home buying market will remain strong. From 1980 to 2000, over 6.2 million minority households joined the ranks of middle-income earners, and they are purchasing housing.
♦ Immigrant children who arrived with their parents in the ‘80s and ‘90s, are now buying homes.
♦ These 2nd generation Americans, if history repeats itself, will out-earn their parents.
♦ As 1st time buyers, they represent 35% of the 1st time resale market.
Immigration of new buyers is largely due to a U.S. policy of family reunification. Today, there are 34 million immigrants, making up 12% of our total U.S. population and representing 28.4% of all households.
♦ Presently, Latinos are the fastest growing segment of the U.S. housing market.
♦ Asians will become the fastest growing segment of the U.S housing market over the next decade,
largely concentrated on the West Coast.
Source: 2004/2005 Census, Federal Reserve, Internal Revenue Service, National Association of Realtors
Why We Will Continue To “Hold Our Own” In 2007!
The National Economy
If we take a look back at this decade, we have seen a lot of really bad things happen to both individuals and businesses. Our nation has seen the crash in the Dot.Com business world, an attack on our own soil, 2 geo-political wars with serious consequences, major stock scandals, record corporate bankruptcies, the doubling of the price of oil, and as if all this were not enough . . . 17 consecutive rate increases by the Fed!
So let us look at what is happening now in our economy . . .
Since 2003, the U.S. has created over 4 million new businesses and over 7 million new salaried jobs. Add the existing 16 million self-employed, the 25 million part-time workers and the 25.8 million small businesses (where 75% are sole proprietorships) and you can see we are generating a whole lot of tax revenue.
Over the past 12 months, we have employed almost 2 million new workers. Our unemployment rate of 4.5% is at a 5-year record low, and since 3% of the population won’t work even if you give them a job, we are near full employment.
These increased tax revenues have helped to reduce the originally projected deficit of $325 billion down to around $240 billion. Our tax revenues are up 14.1% over last year, and the federal debt was reduced by 20.8%. The government’s first quarter fiscal year saw a 32% reduction in the deficit compared to the last year’s 1st quarter – a 5 year low! The Treasury has announced the elimination of the 3-Year Note due to lower deficits!
Corporate profits have doubled in the past 5 years, and this year their after-tax profits averaged 15.3% - the highest in 4 decades. This makes 19 straight quarters of double digit earnings! Corporations posted earnings in excess of $1 Ttrillion in the 1st quarter, and they set a single one day record of $85.5 billion in quarterly taxes paid last Sept. 15th ! Corporate cash is still at a historical high of $2 trillion.
Since 1980, the Gross Domestic Product has risen 70% and is now at $13.3 trillion, helping to shrink our federal deficit. Today, debt is only 1.8% of the GDP, compared with 6.0% in ’83 and 4.7% in ’92.
Source: Federal Reserve, IRS, U.S. Bureau of Labor
So What May Happen The Rest of this Year?
The sub-prime news is now old news and other than a few companies folding, most weathered the storm of making “risky” loans and the interest income
from them has more than off-set the losses! That is why you see private investment groups now acquiring some of these companies while others sell off
some of their loans for millions.
Foreclosures will stay in the news for a couple more months but then most will have run their course and it too will disappear from the news. They rarely
tell you that of all the notices of default filed, 68% of them either cure the problem by: (1) selling their home (2) refinancing (3) making up the back payments.
Today, foreclosures still represent only 1.5% to 2% of all outstanding loans!
First Quarter:
The economy will continue to show positive growth while the Fed continues to stay in the pause mode. Home prices have held steady for the entire region
but there are some minor problems in the areas where a lot of “over-building” has occurred. It will take about a year to regain balance, so some minor price
declines may occur.
Second Quarter:
The Federal Reserve should have begun to reduce the Fed rate but with the economy still doing well and employment numbers still up, it may be later
in the year before they cut interest rates – if at all. This will continue to put a damper on the housing market but will not cause any new problems and
prices should hold. Housing inventories should begin their seasonal rise but less than last year with the southland averaging around a 6 to 8 month
supply of homes. One should remember that as much as half of the inventory numbers are sellers testing the market and are not serious sellers.
Third Quarter:
Here is where we should begin to see some improvement. The not so serious sellers will begin to leave the market by late September and inventory
numbers should begin to decline. If the economy has truly slowed down, the Fed may make their first interest rate cut and that will spur the homebuyers
back into the market. Prices will hold steady.
Fourth Quarter:
If interest rates are cut and buyers do come back into the market, this will be a very busy quarter. Housing prices should begin to rise
and with the media reporting new activity, buyers that have been sitting on the fence will enter the market. As the year comes to a close,
we will have weathered the storm of sub-prime lending, foreclosures and start feeling pretty good as we head into the election year!
What to Watch:
1. If the Fed sees things it does not like and raises interest rates.
2. If increases in our housing inventory push the supply past 8 months.
3. Un-motivated sellers still entering the market in large numbers.
Gary Watts’ forecast for 2007 marks the 34th year of bringing to the real estate industry his outlook for the resale housing market. Since Gary speaks only to the real estate industry, his information is presented in a format that real estate agents can use to inform their clients. His forecasting analysis includes both the current marketplace and where housing demand and pricing will likely to be heading. In the 1970’s he forecasted trends, in the 1980’s he began forecasting the direction of home prices which included his now famous 1989 talk The Party is Over. In the mid 1990’s, he gave the signal to the real estate industry that the bad times were over and in this new millennium, Gary began forecasting home price appreciation rates. His forecast versus the actual appreciation numbers are listed below. Although we are enduring the “hang-over” from the 2003 & 2004 “wild party years” (which includes the present problems in the sub-prime market and increasing foreclosures), Gary still does not see any economic signs, that will cause any major price changes for most of the Southern California housing market – other than remaining in a “neutral position”.
For the record, here are his numbers compared to actual numbers since 2000:
2000 2001 2002 2003 2004 2005 2006 Totals: 2007
Forecast: 12.5% 12.0% 10.0% 15.0% 25.0% 15.0% 15.0% 102.5% 7%
Actual: 13.0% 10.1% 16.8% 19.1% 24.8% 16.5% 3.4% * 104.1% 4.6%
(1st Q. ’07)
Another Bad Year for the Pundits!
Their Forecast for 2006:
One would think that with all the economic data readily available, forecasters would be able to do a better job of forecasting than they do. Each month we know the numbers for employment, gross domestic product growth, interest rates, housing supply and sales, consumer spending, inflation, wholesale costs, crude oil prices, population growth and the status of world economies – just to name a few! These all have an impact on housing and yet, with all this information, they still miss the direction and strength of the U.S. housing market . . . and they have been missing their mark for decades!
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The
typical new house today costs about $28,000.” – Business Week, 1969
“The median price of a home today is approaching $50,000 . . . housing experts predict price rises in
the future won’t be that great.” – National Business, 1977
“The golden-age of risk free run-ups in home prices is gone.” - Money Magazine, 1985
“A home is where the bad investment is.” – San Francisco Examiner, 1996.
Today’s Headlines!
♦ The Housing Bubble Will Burst!
Their first forecast for a bubble was in 2002 and it still has not happened. So much for the Great
American Housing Collapse . . . and you won’t see it in 2007 either! Appreciation rate for the
1st quarter in southern California was 4.6%!
♦ The Correction Phase for Housing Will Be Devastating!
Although there was some speculative over-building in certain areas of the U.S., most of the U.S. housing
market weathered this change without blood running in the streets, as some bubble-bears had forecasted.
♦ Real Estate Prices Will Plummet!
Nationally, home prices ended the year by appreciating between a low of 1.9% to a high of 5.9%, depending upon
which indicator was used. Last year, buyers acquired 1.06 million new and 6.48 million resale homes.
These numbers may have exceed any other time in the history of the U.S., except from mid-2003 to mid-2005.
♦ Foreclosures Reach Record Highs!
What record? Foreclosures are near a record low. Last year, only 1.09% of mortgages went to foreclosure.
That means 98.91% percent of the buyers are making their payments! Today, foreclosures are grabbing the
headlines but the truth is that most foreclosures are due to fraud and unethical lending. That is followed by
medical reasons and then loss of a job. Most of the loans going into foreclosure are from February of 2005
to May of 2006. Today, over 97% of all homeowners are still making their house payments! In California,
the media loves to report record Notices of Default but the fact is that they are not even close to our record
high set in 1996. If you add in the fact that we have built almost 2 million more homes in this State since than,
the percentage is ridiculously low!
♦ Affordability Index at Record Low – This has been their mantra for decades!
Homeownership is at a record high of 69%, with the baby boomers’ ownership at 80%! This affordability
index is archaic and does not account for a world that changed dramatically in 1979!
Source: National Home Builders Association and the National Association of Realtors
Why The World Changed in 1979!
Baby Boomers’ Impact
Never before in the history of the world has a generation accumulated so much wealth as the baby boomers. The Internal Revenue Service will tell you that from 1945 to 1979, incomes increased at the same rate for all tax brackets. By 1979, the early baby boomers had been in the workplace for over 10 years. They were the most educated generation to enter the work force, and they had the skills for our changing world. Today, the IRS tells us that, from 1979 to 2004, the median income in the U.S. rose 18% but . . .
♦ The top 20% of incomes grew by 59%, while the bottom 20% of incomes grew by a measly 7%!
♦ The top 1% of incomes grew by 200% - earning more than the entire bottom 50% of wage earners!
♦ Today, the top 10% of wage earners receives 45% of all household income.
♦ The top 85% of the nation’s wealth resides with the richest 15% of Americans; the bottom 50% of
Americans holds only 2.5% of the nation’s wealth.
Over the next decade, there will be a 25% increase in the population over 50 years of age. They have more money than any preceding generation, due to having dual incomes, equity growth, and record inheritances (60% goes to the top 40%)! This age group is spending $2 trillion dollars annually! Last year, 2.1 million boomers turned 60, with 25% planning on not retiring. They found a way to mix leisure with work and are not ready to fully retire – they have money and income and they are still investing in real estate.
They are part of a major buying wave, as 75% plan on moving to either the west or the south for warmth. Already, 80% own their own home with 25% of those owning additional property. This helps to explain why, in 2005, 27.7% of all sales were for investment purchases and 12.2% of all sales were for 2nd homes!
Those Who Own and Those Who Don’t
1. We are the youngest of the home-building nations. History does repeat itself! Every country has gone through a cycle whereby it breaks into two parts: those who own a home and those who don’t.
2. When this happens, rental rates begin to soar. We are in the beginning cycle of this event, as evidenced by the fact that the national rental rate increased 5.3% in the last 12 months. Since 2001, the rise in rental rates has easily outpaced inflation.
3. Obviously this becomes a great benefit to those who own homes and rental properties – especially when the U.S. occupancy rate is now at 96.2%!
4. The United States is unique among developing countries – we are still growing! Last year our population surpassed the 300 million mark as we added another 2.9 million people. This makes us the 3rd most populous nation in the world, behind China and India. Since 2000, we have added 20 million individuals and by 2030, there will be 80 million more people living in America!
Source: 2004/2005 Census, U.S. Bureau of Labor Statistics
Just How Rich Are We . . .
There are now 2.9 million millionaires in North America, holding $10.2 trillion in assets. There are 317 billionaires in the U.S. holding $1.1 trillion in assets. California is home to 90 billionaires!
The Federal Reserve reports:
· Consumers have $5 trillion dollars in liquid cash sitting in banks and savings and loans!
· In 2006, households’ net worth rose 7.4% and now exceeds $55.6 trillion dollars!
· Homeowners real estate equity is $10.9 trillion dollars – representing a 59% equity position!
· The value of individual stocks and mutual funds held by individuals grew to $10.4 trillion dollars!
· Other assets held by individuals include:
$ 3.2 trillion in bonds and credit instruments
$ 1.1 trillion in insurance reserves
$ 6.7 trillion of equity in non-corporate businesses
$11.1 trillion in pension funds
$ 2.5 trillion in 401K’s – plus $10 billion in loose change in homes and cars!
What Are They Doing With This Wealth?
They or their parents are also in the process of transferring their wealth to their children and grandchildren. These newest home buyers make up the largest group of the 3 buying waves. They are presently 23 to 33 years
of age, and will add 1.2 million new households per year for the next decade! They are purchasing at a median age of 26, yet those purchasing under 25 years of age now represent 14% of the first time home buyers market.
And let us not forget the wave of buyers that represent the normal buying market. This group is projected to grow at a rate of 1.17 million per year for the next 7 years. They include 1st time home buyers (median age 29) and those purchasing upscale homes (median age 45).
Impact of Immigration
Add to this the immigrants purchasing real estate and you can see that the U.S. home buying market will remain strong. From 1980 to 2000, over 6.2 million minority households joined the ranks of middle-income earners, and they are purchasing housing.
♦ Immigrant children who arrived with their parents in the ‘80s and ‘90s, are now buying homes.
♦ These 2nd generation Americans, if history repeats itself, will out-earn their parents.
♦ As 1st time buyers, they represent 35% of the 1st time resale market.
Immigration of new buyers is largely due to a U.S. policy of family reunification. Today, there are 34 million immigrants, making up 12% of our total U.S. population and representing 28.4% of all households.
♦ Presently, Latinos are the fastest growing segment of the U.S. housing market.
♦ Asians will become the fastest growing segment of the U.S housing market over the next decade,
largely concentrated on the West Coast.
Source: 2004/2005 Census, Federal Reserve, Internal Revenue Service, National Association of Realtors
Why We Will Continue To “Hold Our Own” In 2007!
The National Economy
If we take a look back at this decade, we have seen a lot of really bad things happen to both individuals and businesses. Our nation has seen the crash in the Dot.Com business world, an attack on our own soil, 2 geo-political wars with serious consequences, major stock scandals, record corporate bankruptcies, the doubling of the price of oil, and as if all this were not enough . . . 17 consecutive rate increases by the Fed!
So let us look at what is happening now in our economy . . .
Since 2003, the U.S. has created over 4 million new businesses and over 7 million new salaried jobs. Add the existing 16 million self-employed, the 25 million part-time workers and the 25.8 million small businesses (where 75% are sole proprietorships) and you can see we are generating a whole lot of tax revenue.
Over the past 12 months, we have employed almost 2 million new workers. Our unemployment rate of 4.5% is at a 5-year record low, and since 3% of the population won’t work even if you give them a job, we are near full employment.
These increased tax revenues have helped to reduce the originally projected deficit of $325 billion down to around $240 billion. Our tax revenues are up 14.1% over last year, and the federal debt was reduced by 20.8%. The government’s first quarter fiscal year saw a 32% reduction in the deficit compared to the last year’s 1st quarter – a 5 year low! The Treasury has announced the elimination of the 3-Year Note due to lower deficits!
Corporate profits have doubled in the past 5 years, and this year their after-tax profits averaged 15.3% - the highest in 4 decades. This makes 19 straight quarters of double digit earnings! Corporations posted earnings in excess of $1 Ttrillion in the 1st quarter, and they set a single one day record of $85.5 billion in quarterly taxes paid last Sept. 15th ! Corporate cash is still at a historical high of $2 trillion.
Since 1980, the Gross Domestic Product has risen 70% and is now at $13.3 trillion, helping to shrink our federal deficit. Today, debt is only 1.8% of the GDP, compared with 6.0% in ’83 and 4.7% in ’92.
Source: Federal Reserve, IRS, U.S. Bureau of Labor
So What May Happen The Rest of this Year?
The sub-prime news is now old news and other than a few companies folding, most weathered the storm of making “risky” loans and the interest income
from them has more than off-set the losses! That is why you see private investment groups now acquiring some of these companies while others sell off
some of their loans for millions.
Foreclosures will stay in the news for a couple more months but then most will have run their course and it too will disappear from the news. They rarely
tell you that of all the notices of default filed, 68% of them either cure the problem by: (1) selling their home (2) refinancing (3) making up the back payments.
Today, foreclosures still represent only 1.5% to 2% of all outstanding loans!
First Quarter:
The economy will continue to show positive growth while the Fed continues to stay in the pause mode. Home prices have held steady for the entire region
but there are some minor problems in the areas where a lot of “over-building” has occurred. It will take about a year to regain balance, so some minor price
declines may occur.
Second Quarter:
The Federal Reserve should have begun to reduce the Fed rate but with the economy still doing well and employment numbers still up, it may be later
in the year before they cut interest rates – if at all. This will continue to put a damper on the housing market but will not cause any new problems and
prices should hold. Housing inventories should begin their seasonal rise but less than last year with the southland averaging around a 6 to 8 month
supply of homes. One should remember that as much as half of the inventory numbers are sellers testing the market and are not serious sellers.
Third Quarter:
Here is where we should begin to see some improvement. The not so serious sellers will begin to leave the market by late September and inventory
numbers should begin to decline. If the economy has truly slowed down, the Fed may make their first interest rate cut and that will spur the homebuyers
back into the market. Prices will hold steady.
Fourth Quarter:
If interest rates are cut and buyers do come back into the market, this will be a very busy quarter. Housing prices should begin to rise
and with the media reporting new activity, buyers that have been sitting on the fence will enter the market. As the year comes to a close,
we will have weathered the storm of sub-prime lending, foreclosures and start feeling pretty good as we head into the election year!
What to Watch:
1. If the Fed sees things it does not like and raises interest rates.
2. If increases in our housing inventory push the supply past 8 months.
3. Un-motivated sellers still entering the market in large numbers.
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