Editor’s Note: This is an out of date version. Go to the Home Page for the latest forecasts and housing news.
Worst May Be Over in National Housing Market Slowdown
The tide is turning and the worst may be over in the national housing market slowdown, according to the latest assessment by Housing Predictor. The real estate slowdown experienced in the majority of the U.S. is signaling a change.
Housing Predictor continually updates its more than 250 local housing market forecasts in all 50 states, and at least 18 states now have housing markets that are appreciating, many with increased sales volume as a result of lower prices than in 2006.
Overall 56% of the nation’s housing markets are appreciating or have stabilized, according to the study. Ten states are experiencing markets that are stabilizing.
The nations worsening sub-prime loan crisis is causing foreclosures to occur at alarming rates, but not at the all-time peak experienced during the U.S. Savings and Loan Fraud Crisis in 1989.
|Oregon||North Carolina||South Carolina|
The foreclosure rate is expected to increase throughout the remainder of 2007 before it levels off. Investors are purchasing foreclosures and absorbing the inventory at increasingly rapid levels to cut the inventory and new home builders have slashed prices in the majority of markets to rid themselves of inventory.
The U.S. Commerce Department reported in March that the rate of vacant privately owned homes in the nation had reached a new record high as investors hoping to cash in for a quick profit descended on the market place, taking advantage of new creative mortgages offered by overly aggressive lenders.
Problem Lingers With Land
However, above all else lingers an ailing development in Americas real estate market that of a slowly developing problem in the nations land markets. Many investors, attracted to make quick profits on lots in newly developed subdivisions, are now coming face to face with the reality that what they paid for their land has now decreased substantially in value.
Many investors paid higher prices for land than what the market will bear today, and as a result are making payments many cannot afford to make for long. Land foreclosures are already increasing in many west and east coast markets.
More land was purchased in 2004 and 2005 nationally than in the last decade by investors. Similar creative financing was used to purchase land that had been used to purchase home mortgages. As a result, the over supply has nearly stopped land sales in many areas of the country, and national builders and regional developers have put projects on hold until market conditions improve.
Housing Predictor expects the land problem to grow with an increase in foreclosures over the remainder of 2007 and linger into 2008, providing another blow to the national real estate economy. But the scope of economic damage should theoretically be limited to mainly investors, according to economists, who are unsure of what the magnitude of the problem will be to the nations real estate economy.
Economists theorize since fewer people invest in land than in residential real estate, the severity of the problem should be limited to higher net worth individuals, who are more easily able to afford to make loan payments on their property.
However, the theory that real estate markets will not suffer additionally as a result of the wide spread ownership of land is an argument among economists. Many first time investors bought newly developed subdivision lots with marginal down payments, hoping to make a quick buck by flipping land, and many are still trying to sell their property. Economists are unsure of what the impact will be on the real estate market and the national economy as a whole.