North Shore Views

Confused By What You Read About the Housing Market?

It’s hard to know what to make of recent headlines about the housing market. Some days it seems like things are improving. Other days it’s all doom and gloom again. Here are some of the headlines about real estate I’ve read in the last few weeks:

“Housing Market Activity Picks Up”

“2010 Housing Market Off to a Chilly Start”

“Illinois Real Estate Sales Up 35% in 4th Quarter”

“New Wave of Foreclosures Threaten Market”

“Warren Buffett Sees Housing Market Bouncing Back by 2011″

“Chicago Local Housing Report Reveals Market Slow-Down”

“Negative Reports on Housing Continue”

I try to read everything I can about the real estate market and consider myself pretty well-informed on market developments. But even I find myself scratching my head sometimes. I guess I’m not the only one who wonders what to do with the mixed messages we are getting from the media. Lawrence Yun, Chief Economist for the National Association of Realtors, attempted to make some sense out of it all in his podcast on Thursday.

Here’s a summary of his comments on the state of the economy:

The U.S. economy grew 5.9% in 4th quarter 2009 and is projected to grow 3% during 2010.
But this growth was not accompanied by any new job creation, and unemployment remained near 10% in February.

The housing market recovery is still in a delicate state. Sales activity is up and the downward trend in prices appears to have stabilized. However, foreclosures remain high and government policies (e.g., HAMP) to stave off an acceleration of foreclosure activity have been ineffective, so foreclosures will remain high in the near future.

New home sales are down, because builders are just not building. The credit conditions for builders to get loans are very tight. Plus, builders cannot compete with the prices of all the distressed properties that are on the market.

Existing homes sales are doing better due to the tax credit, though sales dipped in January because of the severe weather in many parts of the country. Sales activity is expected to pick up in coming weeks as the April 30 tax credit deadline nears.

In the near term, the sustainability of the housing market recovery is going to depend on two things: consistent job creation and what happens with foreclosures in the coming months. And it’s anybody’s guess how that will play out because we’ve never been in exactly this situation before.

The general consensus among economists is that the housing market will move sideways in 2010 and then begin to grow again at a moderate and sustainable pace beginning in 2011.

Tags: North Shore real estate market predictions, North Shore real estate trends

This entry was posted on Saturday, March 13th, 2010 at 4:44 pm and is filed under North Shore market data, Real estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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