Despite the Rhetoric, Housing is Improving

What a difference a year makes. Just 12 months ago, the Country as a whole was beginning to realize just how severe our economic situation was, and just how horrible things could get. Fear was rampant, and for anyone who thought we had seen the worst of the housing crisis, a nasty surprise was in the making.

As the first few months of the Obama administration began to unfold, negotiations for an historic stimulus package were underway. When the final version of the stimulus package was revealed, those of us whose livelihoods depend on housing were tremendously disappointed to see that the $15,000 home buyer tax credit had been negotiated down to an $8,000 tax credit; only for first time home buyers. What we now know is that the economy was in far worse shape than anyone thought, and the lackluster effort to stimulate housing was simply not enough to jump start housing in those early months of 2009. In the last half of 2009, as it became obvious that the economy and housing prices were beginning to stabilize, first time homebuyers began to take advantage of the housing credit, and housing numbers, in general, began to look much, much better. What we may never know is just how much better 2009 would have been for housing, and the economy in general, had the original $15,000 tax credit for all homebuyers been passed. History will judge whether the $8,000 first time homebuyer tax credit was genius, or far less effective than it could have been. For those who are part of the currently 10.2% of Americans who are unemployed, most would argue that the stimulus package, in general, should have been far more aggressive, and should have included the $15,000 tax credit from the beginning.

Now, we must look forward. We will never know what “might have been”, but what we have to concentrate on is what we now know, and what we believe is about to happen in 2010. For the record, here are my thoughts:

In Buncombe County, NC, in December of 2008, there were well over 400 homes on the market that were classified as single family residential NEW homes; meaning that no one had ever lived in the home. As of the date of this post, there are only 273. What is even more encouraging is that very few new homes are being added to the market. The problem with the market is simply an oversupply of homes; new and existing. The only way to cure that problem is to increase sales, decrease inventory, or both. Sales have not increased, and with the current unemployment rate, it is unlikely to increase dramatically any time soon. But, the fact that the number of new homes on the market has decreased so significantly in the past year, even in this horrible economic environment, is very encouraging. Those who say that the drop in housing starts in October is somehow a bad thing for the housing market, are obviously not understanding the problem. The fact that housing starts are staying low while sales are picking up, though anemic in their increase, is a fabulous sign for the future of the housing market. As the economy begins to gradually improve in 2010, more people will begin to enter the market as potential buyers.
Despite the rhetoric that is constantly spewed by investors who would like to “talk” the market down for a few more months so they can get a few more good deals, Americans are beginning to realize that their window of opportunity is going to begin to close. Over the next 12 to 18 months, the perfect storm of the lowest interest rates in history, housing affordability at an all time high, government incentives to purchase, and the obvious move toward stability in prices, will slowly begin to fade away. If you are not financially able to take advantage of this historic time in the housing market, then by all means, sit this one out for now. The last thing we need are homebuyers continuing to struggle to pay for their homes. However, if you are financially capable of taking advantage of the very best time in recent history to build or buy a home, then DO NOT sit on the sidelines. A rising tide lifts all boats. Now is not the time to stay on shore!

One comment


    July 22, 2010

    Hi Marcia,
    Well…I have no excuse…just a lack of time I suppose. I’ll try to get back at it. Thanks for the encouragement. Hope you guys are doing well.

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