I’ve warned on several previous occasions that the much-hyped ‘housing market recovery’ isn’t a recovery at all – in fact, the housing market’s mired in a slump that’s actually getting worse. All the estate agents advertising that ‘There’s never been a better time to buy/sell your home’ (delete whichever verb isn’t applicable) are basically lying in their teeth in most markets.
The bad news keeps piling up on the housing front, this time with glum statistics from mortgage giant Freddie Mac, which declared Wednesday that many of the nation’s housing markets are stalling.
The third installment of Freddie’s “Multi-Indicator Market Index” (or MiMi), which sizes up homebuying activity and other factors, found that only 10 states and the District of Columbia fall in the “stable” range, as do four of the 50 metro areas included in the index – San Antonio, New Orleans, Austin and Houston.
The outlook for the rest of the housing market looks bleak. “Less than half of the housing markets MiMi covers are showing an improving trend, whereas at this time last year more than 90 percent of these same markets were headed in the right direction,” Frank Nothaft, Freddie’s chief economist, said in a statement.
. . .
Even before the index came out, Freddie had revised its forecast for the housing market downward. Earlier this month, Nothaft said there are “various imbalances” holding it back, most notably the job market. “Housing needs stronger, and just as important, sustained levels of job creation to get the housing engine firing on all cylinders,” he said.
Other industry gauges show that sales of existing homes were down nearly 7 percent from the same time a year ago, home prices are starting to moderate, and builders still lack confidence in the housing market.
There’s more at the link. Sobering reading, and very important for every property-owner.
I’ve said it before, and I’ll say it again: I believe the housing market is headed for another correction at least as severe as the last one, possibly worse, because consumers are ‘tapped out’. They simply can’t afford (or qualify for) the kind of loans that will be needed to buy expensive homes – which means prices will have to drop. Furthermore, older couples looking to downsize to smaller houses or condos for their retirement years have a huge problem. They expected to be able to sell their McMansions to up-and-coming younger buyers who needed the space. Now those younger buyers can’t afford what the older folks think their big houses are worth. The latter can’t afford to drop their prices (because otherwise they can’t settle their mortgages and have enough left over to put down a deposit on their retirement home), but neither can they afford to keep up payments on those mortgages, given their reduced retirement income. They’re in a world of hurt. So is everyone in the housing market who hopes to build and/or sell their retirement homes to them. Except for certain high-demand markets, their buyers have dried up.
I can’t make decisions for anyone else; but if I owned property right now that I was thinking about selling, I’d do so at once, even taking a loss on it if need be, because I probably won’t get a better opportunity for some time to come. On the other hand, if I were looking to buy property, I’d hold off for a while longer. In a year or two I expect I’ll be able to get a lot more for my money.