It’s hard to imagine a worse scenario for housing:
- First-time unemployment claims rose again to 465,000 this week, although the four-week moving average fell slightly. No matter how the media tries to portray this, the truth is that there are a whole lot of people who are out of work and can’t find a job. If you want the unemployment rate to go down nationally, the first-time unemployment claims number needs to fall below 300,000 and frankly, it would be better if it fell to 150,000 or less so that the economy can start to sop up all those who don’t have jobs but want them. This week’s number surprised economists.
- Real estate sales rose by just over 7 percent, to the second worst level ever recorded. The housing inventory rose to more than 11 months supply, which basically means that if you just took all of the homes for sale, it would take over 11 months for all of them to sell at the current rate. In short, there are a ton of homes for sale and not that many are selling. Again, economists were surprised. They expected a better number.
- The Architecture Institute of America Billing Index rose for the third month in a row. That sounds like good news, but the number was still below 50, which means that the net demand for architecture and design services is continuing to shrink. That’s not such good news either.
- Home prices fell 0.5 percent last month. With foreclosures still at record highs, home prices have started to fall again. Some analysts believe that home prices will fall another 5 to 15 percent, depending on where you live.
- Home starts rose 10.5 percent, which was slightly higher than expected, but still far below what many economists would call a “normal” level. Doug Duncan, chief economist of Fannie Mae, told me that he doesn’t expect a normalized market for new construction until 2014 – at the earliest.
So what does this mean? For sellers, it means that you’re going to have a really tough go of it for the next few years. It will be easier to sell in some markets than others. If you want to know where your pricing will have to be, step outside of your house and count the foreclosures. For buyers, this is a great opportunity to find the home of your dreams at an affordable price – if you have the cash and credit to complete the purchase. For homeowners, you’ll never find a better time to refinance your mortgage, so don’t delay.
We’ve never had a recession truly end without a strong housing market – and that’s going all the way back to the Great Depression. Warren Buffet said this week that the recession may have officially ended in June, 2009, but for most Americans it doesn’t feel like it. That and a host of new regulations (think health care and financial reform) have created a tremendous amount of uncertainty for businesses and individuals.
Here’s the bottom line: If you’re not certain about the future, I think you’ll be saving, not spending.
Please leave your comments on the blog.
Last week to purchase tickets for How To Profit From Foreclosures
If you want to learn the right way to do this and build a solid financial future for yourself and your family, buy your tickets now at the special 40 percent discount. Click on this link and it’ll take you to the order page with the ticket discount built right in..