The real estate market and the economy continues to fall. In recent months, credible organizations have reported that the number of houses sold has increased for the first time in several years. Does this mean that the housing market has finally bottomed and that now is a good time to buy a home?
We will examine further the data on properties sold. Out of all homes sold, 10.8% were first time home buyers. Further, the average sales per real estate agent has risen for the first time in years. In certain areas of the United States, home prices have even increased a bit. People searching for a property rose from 177 per real estate broker to 206. The amount of homes each agent was selling rose from 84 to 113. The average amount of sales per real estate agent rose from 3 to 8.
In a recent survey, over 60 industry analysts were asked if now was a good time to buy a house. 60% of those analysts believe that now is the time to buy a house. The main reason they give is that interest rates are very likely to stay low for the remainder of the year. Indeed, low interest rates are the single most important factor in determining the number of home sales. It is both low interest rates and low prices that will continue to pull more buyers into the market.
40% of industry analysts surveyed feel that it is too early to buy a house. They believe that the price of houses will continue to drop. The reason they give is that unemployment will continue to remain high. Even more workers will worry about job security. The banks will continue to reduce credit lines and make fewer home loans. Capital Economics forecasts home prices to fall another 20% before a bottom is reached in late 2009 and early 2010. A small amount of extreme analysts expect home prices to fall all of 2009, 2010, 2011, 2012, 2013 and finally bottom in 2014.
Overall, the consensus is that you should not feel rushed to purchase a house. The country continues to be in a recession and unemployment is continuing to rise. With the banks continuing to make fewer and fewer home loans as they tighten credit, the demand for houses will remain low.
Another negative factor on the price of homes is perceived risk by market participants. Buying a house has always been a good investment until 2006. Now everything has changed. Houses are seen as more of a risky investment now. Even banks view homes in this way which is why they are giving out fewer and fewer loans. With this negative perception in the housing market, I believe that home prices will continue their downward trend for the rest of this year and that 2010 will reveal even better bargains than in 2009.
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