MARKET NEWS AND VIEWS

Real Estate Boom in 2009? or more doom and gloom?  You are probably thinking…Boom?? who’s kidding whom!! Well we may not be exactly in for a boom, but we could see a dramatic improvement in this real estate market over the next 12 months.  Here’s what’s happening that could make 2009 better than anyone might anticipate.

1. 10 YEAR REAL ESTATE CYCLE
All markets are cyclical and a 10 year cycle is normal. If we look back at the markets of 1960, 1970, 1980, and 1990, we see markets at their lowest points, plagued by excessive inventory, foreclosures and short sales. By 1994, the market had stabilized and by 2005 it hit it’s peak (7 years into the cycle) and began its downward trend. Given the 10 year cycle, we should be approaching bottom and moving toward a more normal market, in spite of the financial meltdowns. California Association of REALTORS reports increased sales of existing homes and a shrinkage of foreclosure inventory. As the inventory of foreslosure and short sale homes disappears, prices will stabilize and we will be turning the corner toward an upward trend.

2. PENT UP DEMAND
Buyers and Sellers have been telling their REALTORS that they are waiting for the Presidential election to be over and an economic stimulus package to be put into place.  The election is now behind us and the bailout is in motion.  People still are living their lives … getting married, having children, retiring, relocating.  Many of them waited to buy or sell real estate, waiting for the market conditions to improve.  Look for this pent up demand to start showing up in the market in 2009.

3. THE CREDIT CRUNCH
Credit is still tight.  We are back to qualifying buyers the way it was done in the 1980′s. However, there are great loans out there; and with the bailout funds as well as new guidelines for FHA, Fannie Mae and Freddie Mac more money will flow into the system.  Many credit unions are flush with cash and making excellent loans to highly qualified buyers. As the credit eases this year, buying and selling will become easier.

4. INVENTORY AND DAYS ON MARKET
The amount of inventory and days on market are the best measure of market changes.  Prices always lag behind these statistics.  Your REALTOR tracks these statistics and as inventory shrinks and days on market shorten, we begin to see prices stabilize and market begiin to shift up.  Look for this to happen in 2009.

5. DEMOGRAPHICS
In 2008, the size of Gen Y (born 1977 to 1994) surpassed the size of the Baby Boom generation.  Gen Y wants to and will own real estate. Gen Y is just now hitting its early 30′s and many are buying their first homes. On the other side, the Baby Boomers are most likely retiring.  They are selling larger homes to downsize into a retirement home, or buying second homes.  As new home building has really slowed down so there are fewer new homes being built, the  demand for existing homes will increase and inventory will shrink.

THE CONCLUSION:

The question is not whether there will be another real estate boom —- there will be.  The issue is how long it will be before it starts.  We, at REALTY EXECUTIVES, watch this local market intently and full time. The statistics that we follow and crunch every day allow us to advise what you real estate future holds ….  call us to consult and plan you real estate moves.

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