I disagree with you Steve. I realize my opinion is notta-so-good for your personal interest, but I believe the truth is the housing market is gearing up for an even bigger tank than experienced over the last 18 mo. There is another level of the housing bubble on the cusp of bursting...not to mention the commercial real estate bubble that is going to burst as well.
Not what I want to happen, but what all true indicators point toward. Am I big student of history & economics--and in my evaluation we are headed for times that your average American in 2009 can't even conceive of.
I'm not sure what you are disagreeing with, that prices are low? That people are buying? That some day prices will rise again? That's all I'm saying, and it's not just a matter of opinion.
Lower prices are good for business. Investors, first timers, and folks returning to the market are buying at a brisk pace, while others are waiting, hoping for a further drop. One investor I know told me he's been 'storing up his acorns' and is ready to buy.
When last I checked, we had a 2.7 month supply of homes, whereas a couple of years ago, I believe it was 11 months.
There are plenty of experts making all sorts of predictions. Some promise it's going to get much worse, while others claim the worst is over, and both have their stats to prove their point.
Someone had sent me a chart showing month-by-month, when sub-prime adjustable rates would be adjusting. The peak, at over $100 million (or was it billion?) hit in May of 2008. The worst is over from THAT factor in foreclosures. Then came the warning about the 'ALT-A' (better than sub-prime but not your conventional 30 year fixed) adjustables. When the ALT-A's started adjusting however, they discovered that instead of going up, they were going down. Further, because sub-prime generally had a 2 year fixed period, while ALT-A had 3,5, 7 and even 10 year fixed periods, most ALT-A buyers had equity in their homes by the time the adjustments came, and were able to refi.
On the other side of that coin is the rumor (or fact, depending one who you talk to) that lenders are sitting on thousands of foreclosures, and that they'll unleash them all at once, flooding the market with cheap houses, causing existing homeowners to lose even more equity, and thus creating a new round of people simply walking away from the their obligations.
If that happens, we're in a world of hurt. That these thousands of foreclosures have not been dumped on the market is seen by some as an indication that the lenders want to stay in business and don't want their borrowers in good standing to suddenly walk. Others believe they just don't have 'em to dump.
I was at an investor seminar last year. The old guy presenting claimed to own at that time, 162 homes. He compared the real estate market to an elevator in a tall building. He said that we had been at the 40th floor, enjoying the view, and then came falling down. He said, "I don't think we're at the bottom floor, but I think we may be at the 3rd or 4th, so we don't have much further to go down, but plenty of room to go up. I also know that for the first time in years, when someone pays me rent on one of my California properties, there's some money for the bank, and some for me."
As I said, no one knows where the bottom is, but you can't dispute the facts: Many people have enough confidence to buy homes now, and most feel that regardless of whether they go down further, they are getting good deals.
I took out the sone of a friend looking at homes in Elk Grove yesterday. The reason he is looking now is that he is paying $1100 per month for rent. He can buy a home for $150,000 and have a payment under $1100, plus he gets the $8000 tax credit, can write off his property taxes and interest paid (I always have to say that I am not an accountant and that you should check with your accountant or tax professional to be sure). He can afford more, but he doesn't want to stretch himself thin, which is wise. He said that if he can buy for the same money he could be paying someone else, he'll do it. If the market drops even further, he said he won't worry, because he still gets all of the benefits, and he believes that someday it will come back.