Of course real estate isn't going anywhere. Its just that prices might go a little lower considering inventories are at record highs in a lot of areas of the country and credit standards are much tougher now. Also I don't think opinions are bearish on the real estate market yet. The media is bearish but most of my relatives and friends in this business remain quite bullish. Imo its foolish thinking but thats what makes a market.
I donât really understand the responses Iâve seen to this question here; at least, for the most part. Look: of course there is a base of guaranteed demand for real estate..and, of course, at some point in the not-too-distant future, the domestic real estate market (which is really many many individual markets that are only unified in terms of federal policies, broad banking conditions, and materials costs) will be on an upswing. But thatâs not really relevant to this question, which seems to be more about the intermediate-term picture. That picture is absolutely bleak where prices are concerned. Prices havenât even reacted yet. My parents are currently trying to sell a home in gulf-coast FL in an area where homes were routinely selling for 800K to a 1.2mm one year ago. Not a chance now. I try to tell them to think of it like this: those houses were selling at illusory premiums. They were never really worth that. It was chimerical as a result of a curve of unbelievable availability of money-to-buy-houses. That will correct. And that correction hasnât even happened yet because weâre firmly still in the stage where no one wants to sell their home until the market âcomes backâ. So the inventory stays. They have just recently taken their house off the market. Like so so so many others. So, when you see an inventory number, remember â and this is the biggie â that there are many many more houses âpotentiallyâ for saleâ¦and the moment that inventory starts to get dented at all, there will be a flood of folks (just like my folks) who will jump in line. You canât have that sort of supply situation in a market that never sees a price correction. New regulations will only further take the prices in most major real estate markets back toward the reality that was masked in the flood of credit.
Inventory is there because there is no normalcy to the situation. The BUYERS are spooked like a bitch in Texas winter. They are holding off and holding off till their son nearly gets killed playing on the streets, and till the wife can't wash clothes down t the shopping center laundromat. They are oblivious to tax advantages and comforts and other goodies that come with home ownership. They are renters at the short stick of a landlords mercy. The market is absent of buyers simple as that. Lenders are afraid to lend if they get stuck with a foreclosure or default. That scares the winds out of them. The whole situation is bizarre and weird. But this has happened to me 2 times and when its over there is such a rush to get into the houses, these folks just stampede to your doors falling on each other, and looking like a naked virgin ready to gang raped and banged up.
Most of the press written about real estate is by people who donot own a home. There was this article on YAHOO by an author who decried about home ownership. When I investigated about this writer, its turns out he doesn't own a property and lives off in his van. I went through County records and all that on him. Yet this man was writing all across the Internet portals bad things about real estate. There are lots of angry sorry ass have nots and people who will never be a homeowners, and they have doggedly tried to " Burst the real estate bubble". There is nothing to burst, this isn't stock market folks.
Realestate still has a long way to go. This recent overvaluation of homes is an anomaly and I would say prices will have to return to 2002 levels. You should see the big big drops to continue, 2008 is going to be interesting. #1 easy credit terms with minimal checking,exotic loans etc. opened up the housing market to a large section of the population who typically would not qualify for these homes. #2. This large influx of new customers,speculators began this crazy chain reaction that started propping up prices this was our tulip craze. Prices got out of whack to the average household salary. #3. Builders started building fast to try and catch this influx of buyers and speculators and did they build and did they sell and did speculators flip looking for the greater fool. And now you have it, a glut of inventory and it is growing with the looming foreclosures. Now that banks can no longer hand out Jumbo loans like cotton candy and now you have a large number of buyers who cannot qualify to buy this looming inventory.