Dear Incline Village Real Estate Clients and Friends.
Economic, housing, and real estate blog
This is a rather tough week to report on, with economic data that provides little relief for faltering consumer confidence. But this is to be expected. "The darkness before the dawn" usually isn't just a little dark, it's walk-into-walls dark. There is something about down markets: They tend to shake off any attempts at confidence and optimism before they relent at last.

As mentioned in this update, there is talk about a second leg for the real estate recession. I feel very vulnerable out here on this limb, but I think the real estate sector's main problem is buyer psychology and is NOT a bunch of forces and reasons convincing us not to buy just now. Keep an eye open for improvement, but be wary of the near-term future for interest rates (which really should remain low) and the overall real estate market.

Emerging market countries are battling inflation; their rates are rising. That's the main reason the dollar is stronger at the moment and commodities aren't rising as rapidly or, in some cases, have stalled. If there is one thing to learn from current market movements, it's that we can no longer blithely overlook international markets. The butterfly in Brazil can create a windstorm in Portugal...or America.

In any case, we welcome summer. May it warm into a more hospitable economy.

Best regards,

Tim Lampe, Realtor-Incline Village, Nevada 

 

Comments were written by Steve Peterson, posted by Tim Lampe

 

Commentary ~

June 3, 2011 

The week before last, the word from The Economist was that we were looking at the “darkness before the dawn” in real estate. Most of us are ready to skip ahead to the “dawn,” but the darkness continued unabated this past week, as if to test our ability to remain at least mildly optimistic.

 

Though interest rates moved very little, applications for mortgages from the week ending May 20 were notably weak. Both the press and the public seem generally to be convinced that there is something further to wait for before nailing down one of today’s extremely attractive mortgages.

 

Further challenging our good moods, the Pending Home Sales Index, measuring the growth or decline in the number of new purchase contracts signed in April, fell a weighty 11.6%. And the S&P/Case-Shiller measurement of where real estate prices are going showed prices declining 0.6% in its March 10-city survey (without seasonal adjustment—down a slight 0.1% if seasonally adjusted). The 20-city survey was down 0.2%, seasonally adjusted. In other words, home prices continue to fall in our nation. And though the 0.1% and 0.2% declines may not sound significant—unless you were looking for rising values—many analysts take these findings as a forecast of a double dip for the real estate recession. Not good news.

 

Lawrence Yun, the chief economist for the National Association of RealtorsÒ (which assembles the Pending Home Sale Index each month) tried gamely to explain the 11.6% drop by pointing to the very bad weather in the South (where pending sales declined 17%), climbing oil prices and surprisingly higher unemployment insurance claims. While these are relevant points, the unavoidable fact is that the real estate sector remains very weak, and is incapable of overcoming related negative factors.

 

Lawrence Yun has for several months been lamenting the difficulty of qualifying for a mortgage loan today, and focusing on appraisals, which he claims have been too conservative. It is time, one suspects, to stress instead the opportunities available in the present real estate market. Not for long will we be able to pay such low prices and finance our purchases with such attractive rates. Investors have already awakened to that. The other buyers who are waiting on the sidelines surely will join them relatively soon.