NAR’s Chief Economist, Lawrence Yun, is currently calling for a continuation of soft market conditions for existing-home sales in the months ahead, with improvement expected by the second half of this year. Based on his article titled “Existing-Home Sales to Hold in Narrow Range, Then Begin Upward Trend”, dated 2-7-08, available on NAR’s website.
Yun says in this article, that despite the lowest mortgage rates in a generation, real estate sales activity will remain soft the first half of this year. “Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines.”
My opinion (Ross, that is) is that pent-up demand is becoming significant and once good news is listened to there will be a good amount of sales activity, even on the local level. Once people calm down and see that the policies put in place by the Federal Reserve and Congress are working (I’m talking about the rate cuts and stimulus package), they will see that there has hardly ever been a better time to buy. Unfortunately, most people are the “seeing is believing” type so that means that until later this year, when the measures put in place will begin to have their full effect, they won’t even see the buying opportunities that currently exist. That’s too bad, because many will miss the best opportunities available right now. However, the “herd sentiment” (the opinions of masses of people usually based upon fear, not reason, will invariable hurt them because of the inherent illogic that guides their decision making) won’t allow people to move forward at this time.
Lawrence Yun also made a very interesting observation in the same article when he said, “Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market there is likely to be a notable rise in home sales and prices. If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas- that, in turn, would help stimulate overall economic activity."
Lawrence Yun also said that areas with a high prevalence of subprime lending activity will continue to feel downward price pressure. However, in most other areas where people’s abilities to afford housing exist and is growing, there will be moderately higher home prices. Yun doesn’t state exactly when this will happen; however, it will probably be in 2009, based upon other timeframes he gives.
Yun says in this article, that despite the lowest mortgage rates in a generation, real estate sales activity will remain soft the first half of this year. “Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines.”
My opinion (Ross, that is) is that pent-up demand is becoming significant and once good news is listened to there will be a good amount of sales activity, even on the local level. Once people calm down and see that the policies put in place by the Federal Reserve and Congress are working (I’m talking about the rate cuts and stimulus package), they will see that there has hardly ever been a better time to buy. Unfortunately, most people are the “seeing is believing” type so that means that until later this year, when the measures put in place will begin to have their full effect, they won’t even see the buying opportunities that currently exist. That’s too bad, because many will miss the best opportunities available right now. However, the “herd sentiment” (the opinions of masses of people usually based upon fear, not reason, will invariable hurt them because of the inherent illogic that guides their decision making) won’t allow people to move forward at this time.
Lawrence Yun also made a very interesting observation in the same article when he said, “Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market there is likely to be a notable rise in home sales and prices. If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas- that, in turn, would help stimulate overall economic activity."
Lawrence Yun also said that areas with a high prevalence of subprime lending activity will continue to feel downward price pressure. However, in most other areas where people’s abilities to afford housing exist and is growing, there will be moderately higher home prices. Yun doesn’t state exactly when this will happen; however, it will probably be in 2009, based upon other timeframes he gives.
Very interesting stuff, isn’t it? That’s why we have to know what is going on. Without knowledge we have no direction and are defeated in our purposes.
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