There is an old axiom among lobbyists inside Washington, D.C.'s Beltway that goes: "Don't just do something, stand there!"It's a policy wonk truism arguing that when uncertainty abounds, sometimes the best action is no action. And, one could argue, today's potential home buyers and sellers would be wise to heed the Beltway axiom.
A case of the Case-Shiller jitters
Economist Peter Dawson was hoping for Case-Shiller house price statistics in July that were easier on the eye. Dawson was disappointed: the Case-Shiller Index of 20 major metropolitan areas plunged 15.9% from July 2007 (pdf). Prices in the 10-city index plummeted a record 17.0% from July 2007.
"The July Case-Shiller data is about as bad as it gets. It shows a housing sector where prices remain in free-fall in just about every market, save a few, such as Charlotte, North Carolina and Dallas," Dawson said. "The housing bottom has not occurred and it's not near."
So given the above, what's the best stance regarding housing? For sellers, Dawson said if one has to sell for a job relocation, a sale invariably has to occur. But for those who have a three-year or longer sales horizon, postponing a sale may net a better price, providing the U.S economy recovers in 2009, he said.
For buyers, Dawson said "time is on the buyer's side" in most markets. "At this stage, lease or rent through at least June 2009," Dawson said. "In most major markets, prices are likely to be lower by next spring than they are today."
Dawson also said both buyers and sellers should monitor house sale prices in their cities of interest with an experienced, trusted attorney. "Your attorney has information on recent, comparable sales in your interest area and he's more likely to give you objective information on market conditions, and where the market's headed," Dawson said.
Housing Sector Analysis: Could U.S. median home prices bottom before the spring 2009? It's possible, but given high inventory levels in most U.S. metro areas, the U.S. economy would need to recover robustly in the second half of 2008, increasing the demand for homes. Unfortunately, a robust recovery is not forecast.
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Reader Comments (Page 1 of 1)
8-27-2008 @ 2:40PM
william lindblad said...
Interesting. Two posts. Two different opinions. Mr. Archer/Toll/analyst seems to think that bottom has been achieved.
I love all the great data. Between the Commerce dept and the Nat'l assoc. of Realtors all that comes out is between guesswork and speculative. The government takes a guess and revises it at a later point, and the NAR reports on sales contracts, mind you, this is not to be confused with CLOSING, but they neglect to mention this detail. Please tell me the difference between this type of reporting and rumor mongering??
Between this, lack of oversight and control, voodoo lending, and every other irresponsible practice imaginable - why wonder why there is a problem?
I hardly need Case-Schiller, nor any economist to convince me that this has a LONG way to go. Everything is not even out in the open yet. The commercial end is still in hiding and that consists of the expanse of luxury multi unit buildings and the shopping centers.
Since I am sure that everyone that may read this is a taxpayer, like me, than you should put HUD in search and go to homes for sale and than to Fannie Mae. Look at what they have up - anywhere. Look at any listing and you will find "100 financing". Hey people, that's what brought this mess about, and now that you the taxpayer is footing the bill, it is being perpetuated.
Someone tell me again that it good for the U.S. to keep stupidity in the free markets afloat. If the people involved were a regular business they would be in Chapter 11 long ago and the government would not give a damn. However, those presently involved must own the House and Senate finance committees, the Fed, and of course, you must know Hank Paulson's previous line of work?
Middle class America should not be in the straits that they are - from the starting out to the long retired and if you have never been too concerned with your vote - be wise and use it.