Not so fast. I have no idea why anyone would honestly think that we are anywhere near a housing bottom. We are at least a year if not more away from reaching a point where housing price declines reverse direction. How do I know this?
- Just down the street from me there are some newly constructed 2 bedroom 2.5 bath townhomes. They were put on sale for around $500K. They are not worth anywhere near that much money. My girlfriend and I have joked ever since we saw it being constructed that they would never find anybody to buy at those prices. Just today, I saw that they put up "For Rent" signs on these properties. Clearly, no interest in these units.
- Prices just are not reasonable yet. I picked up a real estate magazine to just see what prices are like around the area. I also go to Redfin pretty often. There are no decent homes available in the area for anything less than $600,000. Still don't know how the average family is going to be able to afford that much especially given the current credit market.
- Economy is going to get worse, not better, in the short term. Gas prices and inflation still haven't totally been translated to business problems. They will soon. This next quarter earnings announcement will just be the beginning of bad news. Consumers are just now adjusting to higher gas prices and not being able to use their home equity as a piggy bank.
Every bust has a dead-cat bounce. People who have been sitting on the sidelines suddenly see these new "deals" and come in. However, this is only false demand. Eventually fundamentals HAVE to catch up. And there is no way that an average family in my area can afford a $600,000 house.
It is definitely not the time to buy yet. I have noticed that even the quick or short sale homes are still very expensive. Desperate homeowners are trying to sell as high as possible in the hopes of getting out minimally scathed, and perhaps turn a slight profit. I predict another two years before housing prices really drop.ReplyDelete
I bet money that these desperate homeowners are waiting for government intervention. In the meantime, they're trying to short sale at the highest price they can get.ReplyDelete