Rick Stroud, Real Estate Pro in 29662

is the housing crisis over in your market? How do you know?

Asked by Rick Stroud, 29662 Thu Jul 12, 2012

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Robert Prechter, the "Elliot Wave" theorist, employs two of my clients as writers.

Robert's outlook is not rosy.

Prechter is a high level macro thinker, but most of us live in the local, right?

Greenville is a good example a a metropolitan city that has decent employment, and that is what will determine the over vs. not over, in every part and parcel of the USA.

Another writer, John Mauldin, who just published "The End Game" has called this the "muddle through" economy for about 3 years.

So, in the simplest terms, I foresee a steady rate of foreclosure and short sale inventory for the next two decades across the country and I want to become a HUD local listing broker within 3-5 years.

Regardless, housing in my submarkets is a terrific value and across price ranges, demand exceeds supply. But...

62% of all Georgia mortgages originated in 2011 were FHA loans.

The USA's contraduopolistic politics, diminished currency value and poor leadership for generations, will challenge every local economy for decades to come, and if other countries are facing austerity measures, just wait til some of the communities in our couch potato Facebook nation get squeezed.

As for me in Intown Atlanta and Decatur, GA I know that it's not over and I will not ever call it over because about 20-30% of the metro ATL market is going to be distressed for years to come. However, when I study diverse submarkets like Virginia Highland, downtown Decatur or Brookwood Hills, I see 95% market health, anchored by solid community institutions like good schools and by great neighbors who love walkable streets and who support the restaurants and businesses that make our world go 'round....

Best hyperlocal example from my city, which is not in crisis - the last restaurant that went out of business in Decatur was Ruby Tuesdays in June.

Robert Prechter encourages investors to stay out of debt instrument investments, and his call for serious hedges against long term T bills is a harbinger for a credit crisis that can flatten any housing boom. That's the stuff that makes anyone a fool for calling a recent bottom across metro Atlanta.

I'll leave you with this upbeat note and a web reference that links you to this late June article called "Sell Paper, Buy Bricks."

Regular readers of The Daily Reckoning may recall that their writer, "Chris Mayer, editor of Capital and Crisis, has also become a big fan of US housing-based investments." He wrote:

“Being bullish on housing is a contrarian view,” says Chris. “In a recent national survey, 37% of homeowners say they think buying a house is a ‘risky investment.’ And 86% think prices will either stay flat or fall.

But Chris believes the housing doom-and-gloomers have got it wrong. He thinks the housing market is on the verge of a rebound. “Real estate is intensely local, of course,” says Chris. “It is hard to generalize. But clearly, there is value out there.

“One individual I know runs a partnership that has purchased 87 homes in Georgia and North Carolina during the last year. When he leases out these homes, his firm averages a 16.5% gross yield. That’s annual rent divided by purchase price, plus closing costs and estimated repair costs. And that is without leverage, net of all expenses, and includes estimates for vacancy and maintenance.

“This is what the big-picture guys miss,” Chris continues. “Economists can talk all they want about how a housing recovery is years away. Maybe so, but the opportunity to invest and make good money is now. In a world of sub-2% Treasury rates, 16.5% gross ain’t bad.

“Now, I am not saying a housing boom is about to happen,” Chris concludes. “There is more wood to chop before we get there. But I am saying that American housing, as an investment asset, looks cheap.”

“Bye-bye, then, to the McMansion phase of the American home investment cycle,” ... “Hello to the era of McBargain."
0 votes Thank Flag Link Mon Jul 16, 2012
Over? It may be too soon to begin the celebration but there are a number of positive indicators that can't be ignoed. The fact that inventory is down, sales are up, multiple offers are happening, and asking prices are inching upward are all good indications of a rebounding market.

Our national economy will likely be the gague by which sustained growth can be measured.

Bill
1 vote Thank Flag Link Sat Jul 14, 2012
There never was a crisis - there was a return to reality.
0 votes Thank Flag Link Sun Jul 22, 2012
Difficult to say that it is over but there are definitely a number of promising trends taking place, including: inventory is down, sales are up and new build home sales are increasing due to the decline in selection. However, none of this has translated into an improvement in sales prices as yet but I expect that will be the next positive trend headed our way.
0 votes Thank Flag Link Sun Jul 22, 2012
Our Phoenix prices have bottomed and started rising again. There are many who whose homes will be upside down until we are at 2005 prices. There's a big reason we had a crisis in the first place. The prices of the starter homes outstripped what "we" can afford. A $10-12 an hour job is a good here. Our prices are rising fast again here and it feels like we've learned nothing. Out-of-state and out-of-the-country investors need to grasp that what looks really cheap to them is out of range for many Arizonans.
0 votes Thank Flag Link Fri Jul 20, 2012
For the Fort Lauderdale real estate market, all the signs indicate the recent housing crisis is over and the market is improving. While this was one of the hardest hit markets with a high home loan default ratio, we were one of the quickest markets to improve.

The recovery is due in part to this area being highly desirable to folks nationally and internationally. In addition, investors seemed to have scooped up many of the short sale properties - buying many of them in bulk with all-cash deals.

In addition to home prices improving, we are experiencing a lack of homes for sale to meet demand. This lack of inventory has created intense competition between real estate agents - often leading to multiple offer situations that further drives home prices up.

Here is a blog post I recently wrote on the competition: Shortage Of Fort Lauderdale Homes Yielding Intense Competition (http://luxurylivingfortlauderdale.com/shortage-of-fort-laude…).

Chad Gray, Realtor
Luxury Living Fort Lauderdale
754-300-6040
0 votes Thank Flag Link Sat Jul 14, 2012
I would ask, "For whom is the crisis over?"
For real estate professionals? Yep, we are doing transactions.
For investors? Yep, there is more money available to acquire bank owned real estate and fleece home owners.
For the buyer? Yep, they are able to see the trend arrows going in the right direction. The big banks have a fix in the system to 'help' the buyer and stick it to the home owner.

For the homeowner? I don't think so. They can't get a HELOC to replace the roof, They see a huge tax bill is just a few years away...and they don't have the money to replace the HVAC. Insurance is continuing to rocket upwards. If they can't buy the roof, the insurance is canceled..the bank forecloses...and this does not look like a recovering market to them. The car is 7 years old and facing the scheduled $2,200 repair. For these the crisis is REAL! Very real.

Those who purchased before 2000, the story may be different, but still not pretty.

Unfortunately, the wealth of middle class America, you know, that 40% they lost, is what the big banks are using to play with the economy now. The crisis may be over for everyone except Jane and Joe taxpayer and home owner who chose to do the 'moral' thing.

Family after family bare the scars inflicted by those who created this crisis. The pain is not even close to being over for many, who felt they should do the right thing. They honestly believed there was a person of good faith on the other side.

Before we start the party with the 'happy dance' please be aware, the fabric of America suffers and endures in absolute silence. As professionals, we need to make certain we have the resources and solutions that are most beneficial for these who are at the cusp of being a casualty.

How will I know the crisis is over and unlikely to occur again...when Bank of America, Citi, Chase and Wells Fargo are all regional banks. Then, we just might be safe.
0 votes Thank Flag Link Sat Jul 14, 2012
Depending what you define as crisis. We still have to get rid of the distress inventory such as short sales and foreclosures especially in judicial states but nationwide sales have been increasing for the past 24 months We have a shortage of inventory, and when a home is priced right according to location and condition it's in a pending status within 30 days. How do I know apart from the stats I read, I'm in the mix everyday :-)
0 votes Thank Flag Link Fri Jul 13, 2012
Competitive bidding.
more Buyers than Sellers.
Increasing prices.
0 votes Thank Flag Link Fri Jul 13, 2012
I wouldn't say it's totally over but here in Fort Lauderdale we're definitely on the way back up. We have a highly desirable area heavily shopped by a wide range of real estate investors. Numbers came out in May 2012 and the median price was up 10% over May 2011. Inventory's way down. The number of Foreclosures are the lowest they've been in 5 years. I do a lot of business with investors looking to buy condos they can rent out immediately, and have a special section for these on my website at http://fortlauderdalebeachproperty.com . On May 1st there were 712 of these units listed on our MLS. On June 1st there were 578. That means Investors bought 19% of the available inventory in one month.
0 votes Thank Flag Link Fri Jul 13, 2012
Denver area has been awesome this year. Low inventory, 10% raise in home pricing this year, lower DOM, low vacany rates, huge rental demand. Some areas are experiencing a sellers market; we have buyers waiting for homes to come on the market and they are getting snatched up in the first week. 25% of all homes sold in June were gone in 7 days or less (metro Denver). I would say we have passed the bottom end of last year.
0 votes Thank Flag Link Thu Jul 12, 2012
Scottsdale and Phoenix hit bottom at the end of last year. It is obvious in a hundred different ways. Every statistic on the book points to the market surging up. Low inventory. Rising prices etc.
0 votes Thank Flag Link Thu Jul 12, 2012
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