Timing the market

The most recent Case-Shiller price index shows home prices up in 17 of the 20 markets it tracks. This is a good sign but what does this really tell us about the Real Estate market? The Case-Shiller price index that came out October 27th is actually based on numbers from August. The good news is we should continue to see positive signs from this widely monitored index for at least a few more months. From the indicators I watch September and October have been steady as well. What indicators do I watch that the big economist do not? A less scientific approach for sure. I follow Real Estate Professionals in major markets on Twitter and Real Estate Blogs. I realize true economist can’t rely on a less scientific approach like twitter and individual bloggers, but I can. These ground level Real Estate combatants may not give me a hard fast number to nail down as to price gains in a market or number of sales for the month but it does give me a feel for how the national market is moving, RIGHT NOW. As an example @PhxREguy (Jay Thompson) recently tweeted this blog post that he wrote. He talks about the resurgence of new home construction around his neighborhood in Phoenix. The national media is just now reporting that new home construction was up 9.4% for the month of September. That’s great news from a month ago but the Phoenix Real Estate Guy tells us in his post that new home construction is still gaining ground in Phoenix as of October 31st.

Some people may look at this and say so what, September/October, what is the difference? It may only make a difference to me, and the agents I manage, as we try to guide our clients as to the best course of action in their Real Estate endeavors. I feel like it is my job to know what has happened locally and nationally in the historical past of Real Estate, what the media is reporting with a little market lag time, what is actually happening right now and what the future indicators are forecasting. On a personal note, I really enjoy being knowledgeable about a subject, real estate, that is of interest to a wide variety of people. Real Estate makes for fun social conversations.

I think we are going to see the extension of the first time home buyer $8000 tax credit extended as well as expanding this to move up buyers for $6500 who want to sale a primary residence and buy a new one. We have seen the first time home buyer credit bring our inventory back to a manageable number of homes on the market in the sub $250,000 price points. The expansion of this credit to move up buyers should have a similar effect on price points above $250,000. This credit will most likely end with contracts written in April which is probably an appropriate time because we usually see a small upswing in purchase activity in the summer anyway. We still need to get unemployment under control. I firmly believe the 9-10% unemployment number is estimated low. I think it is closer to 17% nationally and maybe a little higher around Mooresville. No matter what I feel like we are seeing a bottom form in house prices in this area. There is no way to predict the absolute bottom to any market. If you are thinking a home purchase is a good decision for you don’t try to time the market. You will be missing a great opportunity at historic low prices and historic low interest rates if you do not act by the spring of 2010. That is my bit of advice.