As many of you know yesterday the real estate data came out for the month of December 2008, and in the famous line from the Wizard of OZ “Are you a good Witch or a bad Witch?’
Let’s go over the numbers: Existing home sales up 64%, median home price down 15.3% to $175,400 compared to December 2007 numbers.
Some say this is the housing bottom we have all been waiting for and January’s numbers will be even better with median homes prices increasing.
I say NO! What a surprise. This is what is known as a data head fake! You see the media outlets are so desperate for a glimmer of positive news that they will take bad news and try to put a positive spin on it.
Let’s further break down how I came to my conclusion…
First, inventory generally decreases in the winter months, ask any realtor, so less inventory means better news for existing listings.
Secondly, most sellers who can’t sell their homes or have had their homes on the market for numerous months are taking them off the market and attempting to rent them out to stop or attempt to stop the financial hemorrhaging, thereby further reducing inventory.
Thirdly, the above numbers are a reflection of Short Sales and REO properties that banks and mortgage companies are unloading, coupled with deeply discounted properties AKA “Fire Sales”. I have always told my students and faithful newsletter subscribers that if you drop the price of anything low enough someone will come along and buy it, and that doesn’t mean there is a positive trend developing in the real estate market.
Finally, more inventory will be hitting the market in February and March due to loans readjusting again and more individuals will unfortunate loose their homes with the unemployment rate racing towards 10% nation wide.
That’s my story and I’m sticking to it.
Be well,
James Gage
PS: Now is a great time to do lease options, especially in a market which has lost its’ way:
