My New Blog

It is going to be very interesting to see what happens in the housing area in the next two months.  In November the $8,000 first time home buyer credit goes out of existence.  In the past year many areas where I do appraisals have seen some leveling in values and clearly some inventories are shrinking in the purely residential side.  This is not true for recreational waterfront where inventories continue to remain very high for the demand. And I expect to see prices continue to fall in order to get rid of that inventory. 

But the good news is that residential values (although significantly lower than before) are starting to stabilize.  However this could all change when the first time home buyer credit goes out of existence.  The government created an artificial demand for housing.  Then when that demand goes back to normal we could see a dip again. Also the foreclosure rate has not gone down, but has actually increased.  These foreclosures are typically sold at bargain prices (liquidation value) so that banks don't have to carry them (take your beating and run).

Then there is the recession.  The actual unemployment rate is much higher than that reported by the government.  A recent survey of 1200 unemployed stated that only 40% received unemployment benefits.  This is probably due to the fact many of the unemployed were self-employed and their businesses failed.

My prediction:  Sales of existing houses will slow after the first time home buyer credit is gone.  Values will go down slightly because of this extra money taken out of the system.  And inventories will rise which will put another downward pressure on values.  Let's see what happens.  I hope I'm wrong and that there will be enough of an economic recovery to start getting people back to work.  But I don't expect that to happen in the next few months.