Existing Home Sales Fall Unexpectedly
This is the headline currently on CNBC. And the headline says it all. Who would have thought 6 months ago that a fall in existing home sales at this point would be UNexpected?
You see, existing home sales have risen every month for the past 5 months. The government's $8,000 first time buyer tax credit threw gasoline on the fire of an already pent-up demand, and people have bought in droves in the past 5 months. Then, August sales figures come out and are down 2.7%.
Again, the headline says it all. A year ago, we thought the housing market would never stop declining, but now a small decline is actually a surprise. The talking heads are even saying the decline could be due to the fact that all the inventory under $250,000 is sold (to the first time buyers).
It seems a consensus opinion now that housing has bottomed. Your home has stopped going down in value! Enjoy this moment! What the 2.7% decline should remind us is what I've been saying all along...get ready for an UNDRAMATIC recovery.
There will be no V-shaped recovery in home prices. We may have hit bottom, but get ready to bounce along the bottom for longer than anyone thinks or wants. Home price appreciation will likely be subdued for the next 5 years or more, as we await a more full economic recovery that's only just begun, and don't forget that everything ABOVE $250,000 in housing is still challenged.
Yes, it will be long and undramatic. But I for one am pleased that my home has stopped depreciating. With a much-reduced risk of home price depreciation going forward, home ownership has again become a no-brainer good financial decision, regardless of how slowly the home appreciates in value, just for the tax benefits and for the joy of owning your home over renting one.
You see, existing home sales have risen every month for the past 5 months. The government's $8,000 first time buyer tax credit threw gasoline on the fire of an already pent-up demand, and people have bought in droves in the past 5 months. Then, August sales figures come out and are down 2.7%.
Again, the headline says it all. A year ago, we thought the housing market would never stop declining, but now a small decline is actually a surprise. The talking heads are even saying the decline could be due to the fact that all the inventory under $250,000 is sold (to the first time buyers).
It seems a consensus opinion now that housing has bottomed. Your home has stopped going down in value! Enjoy this moment! What the 2.7% decline should remind us is what I've been saying all along...get ready for an UNDRAMATIC recovery.
There will be no V-shaped recovery in home prices. We may have hit bottom, but get ready to bounce along the bottom for longer than anyone thinks or wants. Home price appreciation will likely be subdued for the next 5 years or more, as we await a more full economic recovery that's only just begun, and don't forget that everything ABOVE $250,000 in housing is still challenged.
Yes, it will be long and undramatic. But I for one am pleased that my home has stopped depreciating. With a much-reduced risk of home price depreciation going forward, home ownership has again become a no-brainer good financial decision, regardless of how slowly the home appreciates in value, just for the tax benefits and for the joy of owning your home over renting one.
Labels: Cincinnati, economy, first time homebuyers, home sales, homebuyer tax credit
posted by Jamie Mandel | 10:09 AM
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9 comments
