Are housing prices going up? Post 184

msn REAL ESTATE   Melinda Fulmer    4/7/12

Going fast: Strong demand has melted away inventory in some housing markets
April Buying Advice: With investors and first-time buyers vying for bargains, homes are being snatched up as soon as they hit the market.

Prices may not be shooting up, but homes are once again selling at a rapid clip in many markets… Yep, that’s right: Multiple offers are back.
10 tightest major housing markets around the country in this slide show

In markets such as Portland, Ore.; Memphis, Tenn.; Seattle; and Salt Lake City, listings are practically evaporating as they come on the market… especially…on the lower end, as investors and first-time buyers vie for bargains. Seattle is also getting highly competitive, as 36% of the inventory has melted off the market.

However, a lot of potential sellers still can’t list their homes at today’s prices because they are underwater on their mortgages…That has kept supply in check. Moreover, the flow of foreclosures and other distressed properties onto the market has slowed considerably after the robo-signing controversy and as loan-modification and rental programs have been expanded. As a result, buyers are fighting over those decent properties that are left. In some cases, they are even competing with foreign buyers who see cheap U.S. real estate as a once-in-a-lifetime rental investment.

February existing-home sales slipped 0.9% to 4.59 million in February from 4.63 million in January, but were 8.8% higher than the 4.22 million sold at the same time last year. The national median existing-home price in February was $156,000, up 0.3% from February 2011…NAR expects sales to rise between 7% and 10% in 2012.

See entire article: http://realestate.msn.com/going-fast-strong-demand-has-melted-away-inventory-in-some-housing-markets

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Coach Mitch’s REFLECTIONS™

 

Misinformation Galore

Q: If investors are buying, especially foreign investors, how does that make the future of the general housing market better?
A: It doesn’t. The stock market is a harbinger of the future, yet it goes down as much as it goes up. Don’t bet that most investors know anything. They guess and hope, just like you.
A: The only real protection is to buy at ridiculously low prices. See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

The current market is contrived

Just as the previous market was hyped, aka The Real Estate Bubble, today’s market is manipulated by forces inimitable US.

The way it should be

In a normal market, new houses are getting added to the total inventory on a continuing basis and existing inventory is being sold. Supply and demand are separate from each other. When I choose to sell has nothing to do with when you choose to buy.

However, now, because of bank/government manipulation, we have fewer houses on the market than we should, causing a decrease to total inventory, resulting in a frenzy for existing inventory.

The market is manipulated because most bank owned properties are sitting vacant, waiting their turn to be marketed, and thus constraining supply. The banks aren’t selling their foreclosed housing inventory at current market prices in order to not “mark down to book value.” They won’t dump the houses, for fear of flooding the market and further reducing the prices. They are conspiring together to only market a few homes at a time. However, their inventory is very large, there are many more foreclosures to come, and the lack luster pricing will continue for some time.

Your risk if buying today

Currently, the banks are to housing, as OPEC is to oil. As a cartel purposefully limits supply, prices go up. By buying a house today, your risk is that, when the spigot from the banks does open up, the extra supply will lower prices.

The large number of short sales and distressed properties still in the system, combined with the low number of mortgage qualifying buyers, keep inventories high enough to depress overall market values. As soon as prices climb, investors will bow out because they only seek bargains.

If that wasn’t enough –

A little spoken about potential irritation: if buying a short sale, the robo-signing fiasco has put the ownership of the home into real question. The bank, it has already been ruled, might be selling a home that it does not own. You could be out the investment. Thank you Miscreant Political Class.

Supply and demand

The size of the housing crisis created this interesting distortion of the simple supply/demand equilibrium.

A huge percentage of the potential market is not for sale simply because the homes are under water and the current owners are either not able to accept a lower price or are not willing to go into foreclosure. Thus, the only homes available are shorts or those which formally had huge equity. That is a low number, thus there are few from which to choose.

The time to invest?

Buyer’s can’t mortgage qualify, so they must rent. Seller’s can’t sell are regular price so they must discount. It would seem that this situation is a formula for an investor’s paradise.

Hmmmm.

But, let’s ask; when the next wave of foreclosures hit, in which direction will the new inventory force prices? Additionally, how will prices react when the Fed finally has to move interest rates up to curb the coming inflation? Don’t forget, a person only can afford an amount certain for a mortgage and as the interest rates go up, the mortgage amount goes down – and housing prices plunge to meet the new reality.

Two choices

For those seeking to buy now – don’t. Save as much as you can for the next several years and purchase when the market has finally flushed itself out. Then the real estate market will be a great bargain, but now it is still too much of a gamble. Media types love to hype real estate, especially because it augers well for the economy, and for their candidate, the current president.

If you can, wait, there’s still plenty of time ahead to make that home purchase.

OR

You can do what I suggest, find a highly motivated seller who has lots of equity and help them move on with their life. This is the essence of Coach Mitch’s “Ridiculously Simple System…”™.

By purchasing at 50% of the current Fair Market Value, FMV, or less, it will be almost impossible for you to lose. It will also be much easier for you to sell because your purchase price was so low and the other house sellers paid so much more. Imagine, paying 30% of FMV! With the monies saved, you can rehabilitate the home to be just the way you dreamed.

Your house can be your financial life preserver or it can sink you.

Be smart.