While the discussion in that article is primarily around the discussion of the ‘two bottoms’, the general theme of the article is that the industry is heading for a turnaround right about now. When we are talking about housing starts and new home sales, the indications are that they have already started to rebound. Although having said that, I recently wrote about first home buyers competing with investors for foreclosures and short sales. While this will continue to be the case in the near future, it’s not a permanent change in the real estate scenery.
So that’s the first of the two bottoms that Calculated Risk speaks of – the second being house prices. They project that these will officially bottom out in March 2012. That’s pretty specific. I’m not sure I’ll be that specific. Instead, I’ll err on the side of caution and say that by June real estate prices will have turned around.
Here’s a lovely graph (courtesy of Calculated Risk) that perfectly illustrates the level of housing prices historically – and also shows that the price bottom is behind us (so to speak).
What makes me so bullish about this turnaround? Well – first of all, the recent drop in the unemployment rate is a very good sign that things are improving for people on the ground. Sure, it’s just one release of data – but it backs up the predictions and is supported by other economic indicators.
Second – there is a buzz about the lack of inventory. What this means is that there is a bunch of real estate agents with few listings. This lack of supply means that what is on the market will go for higher prices, which will then mean that more people will list their properties. It’s a classic supply and demand scenario.
So my message to investors is that the end is in sight – pick your bargains while you can because prices are about to rise. That means call your lenders people, traditional, private mortgages – whatever it takes to land those great deals before the prices start their rise again. To those who are thinking of selling their family home – hold off if you can – it’ll be well worth your while.
Last but not least, to the people who are in the market for their first real estate purchase, sort yourselves out, find a property that fits your criteria and get into the market. There simply has not been a better time to buy real estate in a generation.