Just what we needed: More bad housing news released
I’ve run into several real estate agents who claim that the media are partly to blame for the nation’s housing slump. The newspapers and TV stations are only reporting the bad news about the housing industry, they say. They’re scaring potential buyers, they add. They’re presenting only a steady stream of negative news.
To all that, I have one reply: Show me the good news about the housing industry and I’ll print it.
The sad truth is that there is nothing positive to say right now about the home-selling business. As additional proof of this, the National Association of REALTORS released their latest survey of existing-home sales. The news was not good. In fact, it was awful.
According to the trade association, the sales of existing homes dropped 8.6 percent in November. Agents are now on pace to sell 4.49 housing units this year. That’s down from a pace of 5.02 million homes that was recorded last November.
Lawrence Yun, chief economist for the association, said that the decline comes as no surprise. Yun pointed at the struggling stock market, the high level of unemployment and stagnant wages as the main culprits.
Yun recommends government incentives to encourage people to buy homes. He also would like the government to take steps to help unclog the mortgage pipeline.
Problem is, incentives probably won’t help much. The reason people aren’t buying homes is because they’re worried that they won’t have a job in the next month. They’re worried, too, that whatever home they do buy will dip in value.
Time is the only real solution to the current housing mess the country finds itself in. Let’s face it, during the housing boom that began in late 2001, home prices rose too high too quickly. The value of homes became artificially inflated. At the same time, mortgage lenders gave out loans to anyone who asked for them. They also created unsound loan products, such as interest-only loans, that allowed borrowers to get into homes they really had no business purchasing.
It was, you could say, the perfect recipe for a future housing collapse. The National Association of REALTORS, of course, did little to help, with its economists constantly saying there was no housing bubble, that the housing industry would never pop or crash. Turns out they were wrong.
The government shares some blame, too. For years, presidential administrations — of both the Democratic and Republican stripe — have pushed home ownership relentlessly. The government’s message: Owning a home is good. Renting is not. Unfortunately, that message ignored an important fact: Some people are better off financially renting.
Where does al this leave us? It’s time to wait out the housing slump and the recession. The real estate professionals with whom I’ve spoken have predicted that the housing market will began to show signs of life in either late 2009 or sometime in 2010. That seems like a long time to wait, but market corrections take time, especially when they’re correcting as many serious mistakes as were made during the housing boom of 2001 through 2006.
