The doomdayers had their run yesterday.  But they’re just referring to the same facts that have been present for the last couple of years (lots of foreclosures, shadow inventory, unemployment, government intervention, etc.) and declaring that 2011 is the year that it’ll all come home to roost.  It is the casual-bystander viewpoint.

Let’s review the reasons why we’ll weather the storm:

1.  Lower pricing is a good thing.

The bears think that another 5% to 10% decline will set off a new round of defaults.  I think the close-to-underwater folks have already decided, and another 5% or 10% isn’t going to change their mind.  I hope that those who are underwater go ahead with defaulting in 2011, so we can get it over with – enjoy the free rent while it lasts!

A surge in defaults might put focus on improving the short-sale process, which is still a mess.  

The best part of lower pricing is that it’ll bring more buyers.  If the tax credit caused people to buy, think of the incentive of lower pricing.  While a 5% to 10% dip in prices may not be felt in the wallet like a check for $8,500, lower pricing would be great on the ego.

2.  Servicers will continue the drip system.

The slow processing of defaulters/trustee sales/REO listings is working beautifully for lenders and servicers alike.  Losses are drawn out, and fees racked up – if you are them, what’s not to like?

Servicers are probably telling the MBS-holders that their money is only gone for now – it’ll be back in 5-10 years, hang around!

Hopefully a big lender will go renegade, and flood a test market with well-priced inventory.  They’d see it get gobbled up, especially in the better areas, and they’ll end up wondering why they thought that there was no demand.

3.  The perception of a bad market will keep casual sellers off the field.

An extremely tight inventory of quality homes for sale at reasonable prices will only get tighter.  Bidding wars were erupting throughout December, and, as we head into the spring selling season, the buyers will be out in force.  Any seller who has a decent price on a quality home will be inundated by lookers, and have no trouble selling.

4.  Mortgage rates in the 5%-range won’t dissuade serious buyers.

There might be some grumbling, but buyers who have been looking for months are already anxious.  Rising rates will feed that anxiety.

5.  Unemployment is more of a confidence issue, than actual threat.

The pundits throw around unemployment like jobs are the answer to everything.  But the jobs they are dreaming about aren’t going to magically create homebuyers in the next couple of years, and may never happen.  Yet, in spite of the 10% to 20% unemployment, we have plenty of buyers today!  We could use more sellers – if more actually do lose their job and decide to sell, they will have an audience. 

6.  Hopefully all participants will learn some lessons.

At some point it will become obvious that we need not fear lower prices – conversely, lower prices are the answer.  Unfortunately, that never occurs to the pundits, because the gloom-and doom fears are better for TV soundbites and book sales.

What we need is inventory to sell, and let prices go where they go – most will be surprised at how healthy the demand is for homes around the North SD County Coastal region.

I appreciate the bubbleinfo readers who turned into clients this year – 2010 was the best ever for Jim the Realtor!  Yet I could have sold TWICE as many houses if other realtors had any common sense about the market – their ignorance is as much to blame as anything why we don’t have more sales.

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Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, which began in September, 2005. Stick around!

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