I know times are tough and I know there is a lot of truth to today’s real estate gloom and doom. Yet, could it be that the mass media is overstating the problem and it some ways, causing more through the psychological warfare of the evening news??
Sure home sales and prices are down in many areas, although not in most parts of San Francisco. Sure, foreclosures are up and the blowback from the subprime mortgage crisis may be threatening banks and secondary mortgage lenders, but, according to “Barron’s” (see the link to the story below), there are some early signs the real estate market is trending in a more positive direction—although you may not know it if you rely on the mainstream media for your real estate news.
Some interesting food for thought from the Barron’s article:
Recent data suggest real estate market pessimism may be overblown. Even economist Karl Case, father of the S&P/Case Shiller Home Price Index, admits many industry pundits and members of the media are ignoring key facts—as demonstrated by their focus on negative year-over-year price figures rather than more recent monthly data. An example: Home prices actually increased slightly in eight of 20 Case Shiller markets between March and April. Instead, the focus of most media reports was on year-over-year figures, which continue to support the notion that the market may not have hit bottom, let alone begun to improve.
Transaction-related indices may be skewed at present by a far larger than normal share of subprime-derived default and distress sales. In the San Francisco Bay Area, for example, more expensive homes (those priced over $721,548) have dropped in price by only about 10.7 percent from their peak, compared with homes priced under $473,711, which have tumbled by 40.9 percent.
Even new housing construction numbers suggest an improvement, according to Case. He notes that housing starts, which fell to 975,000 in April from 2.27 million in January 2006, have fallen by similar percentages three times during the last 35 years. Case observes that each previous time this has occurred the market has staged a surprising upturn within a quarter. Only a slide into a recession would temper his optimism about the potential for a similar recurrence of this trend.
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Thank you and be well.
Do you need another real estate newsletter?
Probably not. Yet, in our biased opinion, you should definitely sign up for our twice-monthly email for market insights, webinar invites, local news, gorgeous homes, and more. We never share or sell your information. And, when you’re ready to work with us, please email or call to discuss your plans. We’d love to help!