real estate round-up
It's no fantasy: Real estate is recovering across the nation, but progress isslow
The mood seemed a little lighter this year at the annual convention of the National Association of Realtors in Anaheim, Calif.. Hey, Disneyland was just around the corner, literally within walking distance of Fantasyland and—even better—Tomorrowland.
Some 20,000 Realtors were at the recent Realtors convention and all of them were hoping that the worst was over, that the real estate market had rebounded from its awful crash. The huge lobby bar at the Anaheim Hilton headquarters was packed with Realtors in the afternoons, with big smiles and plenty of cocktails all around. Real estate is getting better, isn’t it?
The jovial mood isn’t backed up with statistics, though.
The nation’s realty market is getting better, to be sure, but it may be two or three years or so until the market is completely healthy again.
The nation’s realty market is getting better, to be sure, but it may be two or three years or so until the market is completely healthy again, according to Lawrence Yun, chief economist of the National Association of Realtors.
Existing-home sales are forecast to edge up about 1 percent this year, and then rise another 4 to 5 percent in 2012, the NAR predicts. For the year, existing home sales will be just under 5 million homes, an improvement over last year, but a far cry from the mid-2000s when annual sales topped 7 million homes.
“The market has been tough,” Yun told reporters. “We anticipate recovery next year through 2013 and 2014.”
Yun cautioned against expecting a rapid rebound, characterizing the upcoming improvement as “moderate” and “gradual.”
Rough on Realtors
The decline in real estate has been hard on the industry’s rank-and-file. At the height of the market, the National Association of Realtors had 1.3 million members, but that number has declined to about 1,050,000 members today. In other words, about a quarter of a million Realtors have left the business over the last four or five years.
Considering the severity of the market downturn, the exodus could have been a lot worse, said Moe Veissi, a Miami Realtor who was just installed as 2012 President of NAR.
About a quarter of a million Realtors have left the business over the last four or five years.
“I don’t want you to think I’m drinking the Kool Aid, but I do believe that in the worst of times we’ve reduced membership less than 5 percent a year and that’s great,” Veissi said.
Some of the cities that were hardest hit in the crash, such as Miami and Phoenix, have seen a lot of inventory being soaked up and a real firming in pricing, Veissi said.
With a upbeat forecast for 2012, optimism is blossoming again in the Realtor community.
“I’d say our folks are very, very positive about the real estate market,” Veissi said.
Some Up Signs
At the Anaheim convention, the NAR released some new predictions.
Home prices are projected to increase on a gradual climb—a 2 percent increase in 2012; a 3 percent price gain in 2013 and a 4 percent increase in 2014. Of course, the price gains will vary from city to city. And if you live in a market where homes lost half of their value in the crash, a 2 percent gain offers little hope.
The home price situation is important to the entire economy. The shaky condition of home prices is keeping consumer confidence exceptionally low, Yun said. Americans aren’t spending freely because they worry about another drop in home values. Some sustained price appreciation will make the overall economy improve.
The NAR economist is also projecting an increase in builder’s new home sales, from a record low of 320,000 in 2011 to 372,000 new homes in 2012. Yes, that means home building hit bottom this year.
Mortgage rates will continue to remain low, Yun said. Rates for 30-year mortgages, currently around 4 percent, will rise to 4.5 percent in 2012, 4.8 percent in 2013 and up to 5.5 percent in 2014, he predicted.
It’s still difficult for home buyers, particularly first-time homebuyers, to obtain a home loan, the NAR reported. Lenders heavily scrutinize borrowers, the lending standards are high, and larger down payments are required. So no matter how low mortgage rates go, if people can’t get loans, there will be no sales increase.Low mortgage rates are a great ingredient for a strong real estate market. But the low rates have not been enough to spark a surge in housing, so far.
Plenty of question marks remain. And there are millions of troubled mortgages that are expected to result in foreclosures over the next year or two. But the housing market has reached a tipping point and is headed for a rebound.
Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of RealtyNewsReport.com