Hat tip to GW for sending in this discussion on today’s market conditions:
http://finance.yahoo.com/news/housing-market-is-stuck-in-downard-spiral–shari-olefson-155251001.html
An excerpt:
Home prices appear to be moderating but that’s good news says Shari Olefson, CEO of The Carnegie Group. “Those big increases that we saw last year were not sustainable and in general we’re still seeing an upward trend when you look at the big picture,” she says.
Still, it’s not all roses for Olefson. “What I wasn’t happy with are some of the trends we’re seeing in new construction,” she notes.
New homes sales fell by 2.4% from June to July, yet July’s new homes sales were up 12.3% from the previous year. “New construction appears to be up significantly from last year but when you dig beneath the surface what’s up are multifamily homes,” says Olefson. “Single family homes are up by just 1% which defies logic because we’ve had over 3 million single family units that have been converted to residential rentals.”
Some believe that these numbers mean that housing is approaching normal levels, but Olefson disagrees. She sees more potential buyers turning into renters and believes there’s a lack of suitable housing and loan products for what people can afford now.
My favorite quote from her:
“We are lacking in products that are suitable for what people can afford and want.”
Buyers want newer 2,000sf to 3,000sf one-story houses, but nobody who has one wants to sell it.
Builders dig the two-story big bombers, and the resale market is full of dated old dogs.
Not saying that this lady did not have valid points but Yahoo in general looks for anyone they can find who has some credibility and is negative housing and they stretch out of their way to put them in front of a camera.
Myself I think we are in a small lull in the market until the biggest bulge in population (22 year olds) gets out of college and gets that first Job hammered down a few years, and yea they will need to find a program to get loans out to potential home buyers (lending is too tight right now).
You got to get cheap land to build larger one stories (what were we saying about sprawl LOL).
Anyway, a downtown Condo generally is not a first choice for buyers if they can afford a SFH a little further out.
Anyway IMO.
The downtown condos are another example of lacking the correct product type.
Some people wouldn’t mind a decent size condo, but the affordable ones are 1,000sf to 1,200sf. Younger people can’t live in that size for long.
For a 3,000 sf single level, and be under $1MM, you need to go to another state or somewhere really hot and flat in California. We’re facing build-out here, it’s over, and the only place to go is up. What happened in San Francisco, (less than 37% ownership rate), will soon be the reality for anywhere within 10 miles of the coast.
It’s a new era.
As a consolation at least there’s a/c.