Market Expectations

12 years ago

I read an interesting article last week on CNN which quoted a survey of 'experts' regarding expectations in residential real estate market between now and 2015. I've attached the link. To see who are making the predictions, look at the embedded individual panelist expectations. Some I would trust, some, well, not so much.

I thought it might be interesting to hear GW's perpective and predictions on your particular markets. You don't have to be specific as to the identity of your particular market, but give enough information to show what type of market and region.

I'll start with the two markets with which I am familiar. I'm not a RE professional, so these are just my lay perspective based upon market watching and reading some statistics and local articles. I could be, and probably am, way off!

Market 1: This has been my hometown for the past 30 years. It is a small southern town, good schools, and nice hometown feel. Lots of families have lived here for generations, but it is also a "bedroom community" for a larger city about 40 miles commute. We really didn't have much of a bubble, just a fairly consisent, but modest year over year increase for the past 15-20 years, with maybe a blip every now and then. Compared to national statistics, housing prices and cost to build are low when compared to comparable homes in other areas. Because no there was no bubble, there was no bust. At most there was a slow down in building activity and stagnation in prices for a year or two, but no drastic drop. The market really appears to have picked up again and I'm surprised at the amount of new construction I've seen. My prediction, we're probably back to the pre "bust" trend to year over year percentage increase in values.

Market 2: This is where we have our second home, and where we plan to retire. Located in the Colordo Rockies, and home to a major ski area, it is a resort town of about 15,000 full time residents. Second homes are a large part of the market, constituting 48 percent of all residential units and about 62 percent of all residential assessed value. This market is a lagging market and has always trended a bit behind the trend nationwide. The bubble formed slower and peaked later here than in many areas. This area is still seeing price drops in most segments, although a few segments are doing slightly better than others. Sales are beginning to pick up slightly as prices find their level. Lot prices are down from between 50%-75% from the peak (which was in 2007). There is virtually no building activity. My prediction is that this market going to be slow to turn around and we'll probably see further price decreases at least through 2012, before leveling off.

Here is a link that might be useful: Expectations Survey

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Comments (7)

OttawaGardener
12 years ago
I live in Ottawa, Canada, which continues to do well economically (lots of federal government jobs and businesses). We never had the bubble in prices like many US cities had (fortunately!!). I'm not in the real estate business, but as a layman, I think that it isn't a buyer's or a seller's market, except for hot neighbourhoods. Prices generally go up about 5% each year, and sales are steady with interest rates so low - although who knows what will happen when rates go up.

"The average sale price of residential properties, including condominiums, sold in August in the Ottawa area was $337,372, an increase of 6.2 per cent over August 2010."
Billl
12 years ago
Raleigh NC here. We had a fairly consistent increase in house prices and not the sudden jumps that some places saw. We have real economic growth and population increases, so prices won't stay stagnant long. When employment picks up, housing won't be far behind.
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Yes, yes, yes! That is ridiculous! I interviewed 5 realtors. All were very nice and had extensive experience in my neighborhood. But only 3 showed up prepared with materials. And only ONE of those actually pulled correct comps and knew what she was presenting to me (as opposed to having her assistant do it and not looking at it until she was showing it to me). That was the one I picked and boy, has she stayed true to her word. She's done everything I've asked. We've changed wording and photos multiple times and she always gets it done same day. She's got her own website in addition to the MLS and she has all sorts of things there as well. When I requested flyers, she had them done and printed within 48 hours! She had my floor plan done before I listed, photos up the day of, and professional photos and 360 views the first week (would have been sooner, but I wasn't ready yet!). Speak up, tell him you're disappointed, and ask him present a marketing plan immediately.
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logic wrote: "dreamgarden, great article....brings a whole new meaning to "what a tangled web we weave when we practice to deceive".... And there you have it in a nutshell. However, I can see why it is more comforting for all too many to simply blame the lowly homebuyer....as one can then continue to remain in denial that of the fact that in essence, our entire finance system is one HUGE scam. Thanks. The more I read about the subprime mess, the more I realize what a "shell game" the bigger interests are playing with everyone's money. Even UK chancellor Alistair Darling has joined growing calls for a probe into the role that credit agencies have played in the world financial crisis. Darling censures rating agencies news.bbc.co.uk/go/pr/fr/-/2/hi/business/6995699.stm Its too bad the U.S. didn't follow Canada's example for insuring mortgages. "All high-ratio mortgages in Canada Ñ those with less than 20 per cent down Ñ must be secured by mortgage insurance, through, for example, the Canada Mortgage and Housing Corporation. In addition, Canadian financial institutions do not finance more than 100 per cent of a home's purchase price, and that value must be verified with a separate appraisal." marys1000 wrote: "Is there going to be a run on banks? Are banks going to fail? All my mother's money is in one bank." If you have all of your money in ONE bank, that could be a problem. I don't know if there is going to be a run on banks in the U.S. or not, but DH and I are NOT waiting to find out. We have already moved some of our investments into T-bills and CD's. The last time we talked to our banker, he told us we didn't have any sub-prime investments and tried to convince us to keep everything in the market. When I asked him to tell us which part of our portfolio was FDIC insured (or if he would be willing to support us if the market drops), he was silent. Never suggested T-bills or CD's either. I guess he is only interested in our "welfare" as long as he (and his employer) stand to gain. Now I understand why the Russians stuffed money under their mattresses after their banks failed so many times. Time-The Last Sacrifice- Dec. 22, 1947 The Soviets had spiraled into economic trouble similar in some ways to capitalist inflationary difficulties. The ruble, officially valued at 20 U.S. cents, was worth no more than three in actual buying power. Illegal speculation by bureaucrats, collective-farm bosses, store and factory managers and others had become a lively menace to state planning. Peasants, and some city dwellers, had also accumulated hoards of rubles largely because too few of the things they needed, or wanted to buy, were available. Never knowing when deposits might be frozen, they distrusted banks, kept their hoarded money at home. Rationing controls could not be lifted until this money was destroyed, and its destruction was Zhdanov's principal aim.
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chisue
12 years ago
Suburb on Chicago's North Shore. Well...it's not as bad as it was. (January 2009 median sale price was down 33% from peak.) It still isn't *good* (Median down 15.5% y-o-y now). There are sales -- about half as many as during peak.

I think we have yet more foreclosures to work through. Some of the most expensive RE in town has gone for bank costs, with more to come. You can buy that $10M lakefront estate for less than half -- if you have a lot of cash to put up for it. If I call up listings with price reductions on Trulia...there are always plenty.

The Chicago Tribune Home section featured a story over the weekend about J.D. Powers. They could not find enough buyers of new homes within the last year to allow a meaningful survey of customer satisfaction with builders.
chisue
12 years ago
The link that asks about government intervention helping housing is unclear to me. So far the intervention has been to lower interest rates. They are already VERY low. I don't think that's much of a factor to move RE now, in a slow or declining market. Too many people lack jobs or job security, and banks are (wisely) demanding more equity.

Some RE will sell in markets with established wealth. I'm guessing retirement residences and second homes. The only upward trend I see in RE around here is rising rents.
njannrosen
12 years ago
I understand that NJ has been holding back foreclosures and they'll probably hit next year,further depressing the market. We were a little slow in seeing prices drop, but right now we're well below 2006 prices, closer to 2001. I thought last year was bad, but this year having my own house for sale has really brought out how many properties are for sale and how picky buyers have gotten, the media constantly talking about the glut of homes and dropping prices gives them the impression they can make a killing. We received a low ball offer which the buyer left open for when we got desperate. Thankfully, we got better offer and are under contract now.

Also, the general economy makes people afraid of their future employment causing buyers to be extra cautious and many times buying below their ability.
LoveInTheHouse
12 years ago
I think the market is still dropping. I was interested in the house I'm buying in NJ last year. At that time, it was out of my price range quite a bit, about $75,000 and the agent said the seller wouldn't budge on the price. She actually said that it was a thorn in her side because she'd taken tons of buyers to see it and the seller wouldn't go down a penny. We were disappointed and put it out of our minds. A year later, we happened to stumble upon it and now it was in our price range. Of course during this year, I've had to lower the price on my house too a little bit. What scares me is I see property around here priced way below the market and I know it's a seller in financial difficulties. That causes the rest of us to have to lower our prices to compete. So yeah, it's still dropping and I don't think it's going to get much better until EVERYONE is doing better.
kats_meow
12 years ago
When my house was on the market I endlessly analyzed the comps and the listings. Probably overanalyzed them, trying to find a consistent theme when maybe there wasn't one.

But, anyway, what I seem to find was that house prices overall really weren't going down that much overall. However, for higher end houses -- top 5 to 10% of the market houses weren't selling. Houses were sitting on the market for a very long time before selling -- often over 2 years. Typically, you would see a house listed for $X and then selling 2 years later for 80% of $X. Now, that 80% of $X wasn't a bad price really although probably a little less than the house would have sold for, say, 4 years ago.

The houses that sold quickly were, of course, the ones where the owner listed initially for say 85% or 90% of $X.

The thing is that lots of people just weren't willing to take 80% of $X so you would see houses listed for 6 months or a year or two that just then went off the market and there was no sale. You might see 50 houses listed for sale and then see that there were only 5 sales in a 3 month period so most houses just weren't selling. The listing prices were very misleading since most houses weren't actually selling for anything close to those listing prices.

Market Expectations

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OttawaGardener

Billl

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