It is easy to sound like a broken record when it comes to the housing market. Efforts to jumpstart a return to normalcy, such as the first-time homebuyer’s tax credit, have failed. Prices continue to decline, though not as much as many market experts predicted. Interest rates, long the catalyst to improving the market, have been at historic lows for some time to no avail.
Recent world events have only added to the confusion. Economists are scrambling to interpret what the implications will be on the home market. Oil and gas prices spiking—supposedly—due to unrest in the Middle East and natural disasters occurring with shocking regularity have many predicting the world will end. Given such dire predictions, it would be better for one to simply ignore the bad—the housing market—and concentrate on the good, anything other than the housing market.
Real estate is not rocket science, but to wrest it from its doldrums it will need the necessary fuel and the clarity to ignite it. As long as the economy remains at the low end of the performance scale and the resulting job market remains on life support, housing will suffer. Need proof? Recent reports from the National Association of Homebuilders indicate that from an overall perspective, the 2011 national housing market will mimic the LIE at rush hour: No movement.
Add to that reports of a another wave of foreclosures on the way as the banks and the government have come to terms in regard to the “robo-signing” issue, which will not have a positive effect on the market. Homes that are not sporting a fire sale banner will have a hard time getting a second glance.
Given the state of things many are trying to sell their homes here and head for greener pastures. I know some homeowners who have dropped their prices by more than $200,000, equating to 25 percent of the original asking price. Maybe their homes were overpriced to begin with, but these aren’t million dollar abodes on the water. To a large degree, they represent a good portion of the market, those who are house rich but cash poor. Put simply, if you have the means, now is the time to buy. But if you have to sell first, chances are you have been unwilling to take the price hit necessary to spark a sale. The buying cycle that was so vigorous when you could get a mortgage with your Big Mac is all but a fond memory, at least for mortgage brokers.
Speaking of mortgages, getting one remains a challenge as lending institutions continue to hold the purse strings tight. A significant down payment is now a prerequisite. But with home prices not declining as much as once anticipated, at least not yet, it remains nigh impossible for many to save for a down payment and cover ever rising costs associated with food, oil and taxes. Am I the only one who sees inflation perched like a vulture on the fence? That won’t help.