When a real estate consultant declares a residential real estate meltdown over, you might be inclined to chalk his enthusiasm up to optimism. But when a professor from Arizona State University weighs in, you may start to allow yourself some hope – not because the real estate consultant does not know what he’s talking about, but because in general the academic predictions on the real estate front have just been plain dreadful. When the two agree, it’s definitely time to sit up and take notice. (Unfortunately for them, there’s a much better way to analyze markets than either of them are using… more in a minute.)
In Phoenix, Arizona, the real estate market is starting to stir, reports Karl Guntermann, the Fred E. Taylor professor of real estate at Arizona State University’s W.P. Carey School of Business, and R.L. Brown, publisher of the Phoenix Housing Letter and professional real estate consultant. What makes these two experts’ opinions even more interesting is that they derived their conclusions using totally different data and analysis methods. Guntermann predicts that median home sales in the area will be up nearly $15,000 from May 2009 (when the market is generally agreed to have hit bottom in the area) when Septembers numbers from in. Brown notes that the $8,000 first-time homebuyer credit actually boosted construction in the area as builders realized that they had only a limited amount of time to meet demand with new houses. Brown predicts this trend will continue, along with the gradual climb in sales and values, if the government extends the credit or creates a comparable tax break.
Interestingly, this good news for the residential arena does not mean good news for the townhouse/condo markets. In fact, Guntermann predicts 36 percent annual drop in prices by July 2010. However, this does not prevent either expert from expressing some guarded but significant optimism. In fact, Brown goes all the way to stating that the local “competitive market is alive… [and] reawakening.”
I personally enjoy this news not just because it is a ray of sunshine in a storm of dark and gloomy reporting, but also because of the diversity of the two experts. They are coming at the problem from completely different perspectives, and I imagine if we talked to each of them they would have very different ideas about how to best handle the housing “crisis” and their local area’s apparent growth and initial recovery. This gives me hope not just because the news looks good, but because two people with very different viewpoints are able to see the light at the end of the tunnel.
However… there’s really only one market analysis tool that I trust for determining the relative strength or weakness of a real estate market. I consider this tool a secret weapon and is virtually unknown in the real estate investing community. This is the type of tool that professional investors use, and I simply have no idea why individual investors haven’t been smart enough to take advantage of it yet.
I don’t have time to write more about it right now, but will string together a few thoughts for you about it later this week. Better yet – if you’re interested in learning about this heavyweight market analysis & prediction tool, leave me a comment below.
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