According to Jan Hatzius, chief economist of the Goldman Sachs Group in New York, the U.S. housing market could, finally, be approaching the bottom[1]. And that’s good news: “Over the next few years,” says Hatzius, “the housing sector is going to improve” although there is still “a lot of excess supply out there.” Other analysts agree, saying that since “the economy doesn’t seem to be falling off any more,” sales in many areas around the country will likely level throughout 2011 and could slowly climb in 2012[2].
Matt Larson, a Real Estate Retrievers broker, said that the key is that home prices have finally gotten low enough that people are seeing the purchase of a home as a “deal” again. He cites the tax incentives of 2009 and 2010 as the cause of a big surge and then drop off in the market, but believes that the housing market is on the road to recovery.
Do you think that 2011 will be the year that the housing market finally bottoms out?
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[1] http://www.businessweek.com/news/2011-03-17/goldman-sachs-s-hatzius-says-u-s-housing-market-near-bottom.html
[2] http://madisonet.com/site/news.cfm?newsid=20458138&BRD=1302&PAG=461&dept_id=181987&rfi=6
I don’t think that housing prices will bottom in 2011 due to the shadow inventory of foreclosures. If prices do bottom out then the trough will be elongated and the key word in the article is SLOW growth; very slow.
I don’t see any new starts in homes yet (No new homes are being built). If the housing market were not still falling I should see some new homes going up. New homes are driven by the people who buy them: If a contractor has a client he’ll build. If there is no client we call that a spec home, that’s not likely to happen until customers start coming back.
My gauge of the “bottom” is when jobs start to return, I don’t see any yet.
The “excess supply” Hatzius alludes to will not go away until lending standards are relaxed some. No matter how much of a “deal” a house might be, if only a small portion of the public has the ability to obtaining financing, we’ll be stuck in a buyers market for years to come. Bank REO’s are nearly impossible for owner occupants to finance yet banks don’t want investors to make profits on these homes either. One answer to this problem would be for HUD to open FHA 203K financing to investors, even if they required larger down payments. Investors would scoop up the REO’s and short sales, rehab the homes and then sell them to owner occupants with FHA or VA financing. But that would mean investors would make a profit and that seems to be a big problem for the government.
What abut HVCC, Dodd Frank act, April 1, 2011. We still have adjustable rate mortgages creating negative amoritization. Huge amount foreclosures coming down pipeline. You think 2011-2012 will be the recovery? 2015 or later is when everything starts turning around. Ten year real esate cycle begins. If economy does well. Face the facts.