Dennis Norman Musings

By: Dennis Norman

The National Association of REALTORS(R) (NAR) is projecting existing home sales for 2008 to come in at 5.2 million homes sold down from 5.7 million for 2007, 6.5 million for 2006 and 7.1 million for 2005.  On a positive note, sales increased from August to September by over 5% and sales for 2008 through September are up over 1% from the same time last year.  NAR is also reporting a 9% decline in the median home prices nationwide for the past year.

This could indicate that the market has bottomed out or is at least close to doing so.  Prices have finally decreased to the point where sales are increasing slightly. 

Of course there are many things that could affect this and send the market sharply up or down.  We have a new President taking office in 2 months that is of the same party as that which will control Congress giving the Democratic party a lot of power.  I’m not going to get into my personal politics here, I’m just looking at the issue as to how it could affect our economy and the real estate market.  The way I see it our economy, as well as the real estate market, is sitting on “pins and needles” waiting to see what the effect will be of our newly elected President whose platform was “Change”.  Hopefully it will be change for the good and the economy will rebound and the housing market will, at a minimum, stabilize.  Time will tell. 

Part of the problem with the housing market is that it was overbuilt.  The number of new homes being built continued to increase during the real estate boom but as demand slowed inventories grew out of control driving prices down.  This is changing too…the National Association of Homebuilders recently reported that new and Existing home supply dropped from August to September.  While the inventory of new & existing homes for sale is the lowest it has been all year, the number of months of inventory that exists is still high in both categories and in fact roughly double what it was in 2004 and 2005.  Granted those years were during the boom so inventories were low, but I think what this is showing us is things are moving in the right direction to indicate maybe prices won’t drop much more from their present levels, however there is plenty of inventory to assure you should still find plenty of opportunities to buy right.

I personally think now is a good time to buy.  Prices may, depending on what happens with the economy in the next few months, drop lower, however there is no doubt prices are low.  Home ownership is a long term investment and not a short term speculative play so if you are thinking about buying a home I would buy now.  Even if prices drop slightly more in the coming months you will still be way ahead once we leave this down market behind us.  The problem with waiting for the absolute bottom is…whether you are talking real esate, the stock market or gas prices, we never know where the bottom is until after we have hit it and prices have started moving upward and then it’s too late to get in on the bottom.  I think we are close enough to bottom now to go for it and buy!