Housing Slump is Expected to Continue

[Jul 11, 2007.]

There is every indication that the housing crisis that has gripped the nation is likely to continue in the months ahead.

Money magazine reports that some 42 percent of major housing markets are in a state of decline. In fact, there are predictions that some markets will drop by double digits in the coming five years.

In fact, the National Association of Realtors is forecasting a one percent decline throughout the U.S. in existing home prices this year. That's apparently the first gloomy prediction since the association began monitoring prices years ago.

Financial experts note that it's important for homeowners to monitor leading indicators in their local communities in order to determine whether a recovery is occurring in the area in which they live. For instance, a neighborhood real estate broker can give you an idea of current inventory, the local pace of sales, and other vital pieces of market information.

If a market has less than six-and-a-half months of inventory, the homes often appreciate more quickly than inflation. When the inventory stands at nine to ten months, the prices decline, making it quite difficult for home sellers. If you compare the monthly data with that of previous quarters, you should be able to ascertain whether the market is in an upward or downward spiral.

You should also find out from your broker how long the typical house is on the market. Then compare that figure to the average time spent on the market six months ago. A general rule of thumb states that if a house typically sells in less than a month, it's a seller's market. But if it takes 90 days, the buyer may be the one who has the advantage.

Still, anecdotal evidence indicates that the real estate market may not be as gloomy as might first appear. There are reports that realtors are feeling more confident and sellers are feeling less stressed.

Julie Ann Amos
July 11th 2007

Recent Housing News

• Treasury Yields Decrease Following Housing Report
  Bond prices rose Monday following a report that indicated May home sales figures were disappointing. The 10-year Treasury note increased 10/32 or $3.12 on a $1,000 note for a yield of 5.09 percent, a decrease from 5.13 percent Friday. [July 8th 2007]


• Interest Rate Round-Up
  A recent survey of interest rates on typical banking products conducted by Bankrate.com yielded mixed results. [July 8th 2007]


• Home Sales Dip to a Four-Year Low
  New statistics show that sales of existing houses dropped to the lowest level in four years in May. Meanwhile, the median home price has slipped for the 10 th month in a row—a new record. [July 7th 2007]


• Worries About Interest Rates Decline on Wall Street
  Wall Street is apparently not as worried about rising interest rates as it was earlier this year—judging from a recent rise in the Dow. [July 7th 2007