Housing Market 2014 - Truth and Jeopardy
To buy or not to buy? Sell now or sell later? I spend an enormous amount of time online in the real estate arena, listening to the "chatter" about concerns that may affect myself and my business partner's real estate practice, and also as webmaster of a real estate site trying to drive business. Point is, on the one hand you hear positive news about the housing market but then negative offsets. I find myself in a position to see both sides of it frequently, so let's start with truth.
Housing Market - Truth
Everyone knows how awful it was a few short years ago, and then we seem to have enjoyed a lot of healing. Healing as in "sitting-up-and-talking-in-bed-healing", but not quite "up-and-walking-around-yet-sort-of-healing". Still, at least the housing market isn't "lying in a coma" anymore. We did enjoy some much appreciated progress here in Ohio with fewer reported foreclosures, growing house values and better economy. But it still feels fragile to me, and as I talk to Realtors around the U.S. on Facebook, Google Plus or LinkedIn, they give me the impression they're feeling the same. Why is that? I'll get to the "jeopardy" in a moment.
Some positive truths include the national jobs outlook and unemployment reporting. The Bureau of Labor Statistics report from July 3rd, 2014 states The number of long-term unemployed decreased by 293,000 this June to 3.1 million and accounts for 32.8 percent of unemployed while over the last twelve months, the number of long-term unemployed has declined by a happy 1.2 million. However, just to play the Devil's Advocate, I notice in this report that many of these "happy" statistics are due to involuntary part time employment (as in, lost a job, and finding part time work, sometimes working two jobs and / or working part time because hours have been cut back).
Housing Market - Jeopardy
In this video, (courtesy of The Collingwood Group) Tim Roods on CNBC's "Street Signs" July 1st sheds some keen insights on the housing market and after watching you can see why so many who are involved in the real estate industry are feeling a bit of uncertainty or anxiety.
Not just Realtors, but loan offices and mortgage lenders, title and warranty companies, investors and property management companies.
Right off the bat Mr. Roods, co-founder and Chairman of The Collingwood Group, points out right of the bat that we have some very dynamic things driving the housing market currently but warns the industry we could take a dive nationally if unemployment doesn't improve and interest rates rise.
Jeopardy - Student Loan Debt, Rising Interest Rates and Unemployment Factors
Add to that, the National Association of Realtors recently published they found the current average age of a first time buyer is 31, however, in the age group of 25-33 many are carrying in excess of $27,000 in student loan debt, many living with their parents or making decisions to stay renting.
The staggering volume of student loan debts across the nation are in fact hindering sales with this key demographic. We do see rent rising across the nation, so where does that leave most of these would-be home buyers? Trapped.
So, naturally, those of us in the real estate industry are being vigilant, watching for rising rates with one eye on unemployment and one eye on lending policy. It's also more difficult for many potential buyers over the last few years dug out their savings and hit the credit cards to pay bills or just survive which adversely affecting credit.
The gov't has made some bold moves, Fannie gets more relaxed and credit restrictions have loosened somewhat but is all of this going to enough? I hope that the powers that be continue to take it slow and steady, and not sacrifice the precious progress the housing market has made thus far for perceived temporary larger gains. We're still a little too close to the ledge for my comfort.
You can view more about student loan debt and national unemployment via the related links below.
To buy or not to buy?
I can honestly say (at least here in Ohio) without dissing the housing market news, it is an excellent time to buy if you can, however, my personal opinion is that if you don't have it together it behooves you to get it together. You might think current home prices are high compared to say 2011-2013, however many markets are still under valued. For instance Dayton Ohio real estate's residential listings are 16% undervalued, and Cleveland is more astounding yet being 21% under valued. Prices aren't rising in these communities, they're merely catching up.
Engage in sound credit profile activity and gather up some bill paying power beyond a down payment and closing costs. After all, in almost all cases it's cheaper to rent that buy. If you continue to rent too long, purchasing a home may get further and further out of your reach.