Traditionally, the real estate market has been dependent upon three key factors; home prices, interest rates and unemployment. In other words, if prices are reasonable, monthly payments are low and enough people have good incomes, plenty of homes will be bought and sold.So, how does this relate to our current market? Are we starting to see a turn around?
The NAR Home Affordability Index is the best it’s been in over 40 years. Prices have come down to the point where many buyers, especially first-time buyers are coming back into the market. We could use a little lender help with jumbo loans, but moderately priced homes are selling well in most markets.
Mortgage rates have risen lately, but they’re still at historically low levels. The Federal Reserve has pledged to keep rates low through this cycle. So, I would expect that they may take some action this summer to bring rates a bit lower. However, the jumbo loans remain a problem and I hope that lenders recognize this and will make more funds available in this segment of the market.
Now, as for unemployment, the picture is still unclear. Last month we reached 9.4% and most analysts believe it may still push higher and could take some time before returning to the 5% range. This makes the prospect for a quick recovery more difficult.
I believe a housing recovery may be underway, but it will be a slow one. We’ll be “skipping” along the bottom for a little while. Yes, we‘re already seeing signs of a bounce back in some markets. But I think overall, this market will move sideways before it gets significant traction in an upward direction.
For home sales, 2009 may be only slightly better than 2008. All these factors mean that we need to deal with the market we have. Distressed properties continue to be over 50% of all sales. If we can learn to deal with this market, we will be successful. I’m proud that all the surveys and rankings show that RE/MAX agents continue to out-produce the competition. So, keep doing what you’re doing.
Today, in 2009 we have a sales volume like we saw in 2003. Most of us did very well in 2003, and we’ll do well in 2009 too. Being resourceful and innovative is the key. Yes, the market is showing signs of a turn around, but don’t lose your focus. Respond to the challenge, and make each year your best ever.