Robert Shiller; "The annual declines in the deposits are a good indicator of the dire straits of the U.S, Residential Real Estate Markets". Mr. Shiller creates a table of the twenty cities he follows to create his indices. The index was negative for the March, 27, 2007 report following gains of 14-15% for the same cities in January 2006. The full report can be accessed here.
Mr. Shiller is the Chief Economist at MacroMarkets LLC
Conrad Dequadros; "Right now we see tremendous. volatility in the housing market and a lot of that has to do with the fact that we had unusual weather patterns..I think volatility is related to the weather and it is difficult to come to a clear assessment on the housing market right now.. our feeling is that we are near the bottom. You can this view news videos at Your Property Path
A Senior Economist at Bear Stearns
Ben Bernake; "The uncertainties about the outlook have increased somewhat in recent weeks,'' Bernanke told Congress. ``The correction in the housing market could turn out to be more severe than we currently expect. We could yet see greater spillover from the weakness in housing to employment and consumer spending than has occurred thus far."
Federal Reserve Board Chairman
Frank Nothaft; "Recent data releases sent conflicting signals about the direction of the housing market," "The rise in existing home sales in February to a 6.69 million unit pace, the highest level since last April, offered some hope of firming in housing demand. In contrast, February's new home sales fell unexpectedly to 848,000 units, the slowest pace since June 2000, suggesting that more time will be needed before a housing recovery takes place."
Freddie Mac vice president and chief economist
David Lereah; “Underlying trends point to a housing recovery in 2007, but it will take a couple months for us to get a better handle on it. Existing-home sales are expected to slowly improve from what appears to be the cyclical low last fall, but we think there will be some additional pain in the new home market, which hopefully will start to rise later in the year.”
National Association of Realtors and chief economist
Well we got uncertainty and that is the take from these professionals,so what do we do with this? In the investment world, uncertainty breeds a wait and see attitude. we will go from "gotta have it" to "maybe not right now"....
What does it mean?
Sales will slow, prices will drop and mortgage rates will come down in response to slowing demand....it could get worse when the ARM's reset and foreclosures put more supply on the market, pushing prices further down. But, the jury is out or at least of different opinions as to whether we have anything other than a cyclical slowdown.
Mortgage rates have declined and prices are beginning to drop. There is a point in which this combination creates buyers. Our guess is that when people go into a wait and see then others follow and the time line extends.
For example the article on Your Property Path indicates that The 15-year FRM this week averaged 5.86 percent down from last weeks 5.90 percent. A year ago, the 15-year FRM averaged 6.00 percent.
According to housingtracker blog most but not all markets and even then not a great deal. The largest price drop was in San Jose California at 7.3% followed by Santa Cruz California by 5%.
What to do?
Try not to listen too much to all the talking heads. They are in the business of publishing or promoting. No one can see the direction yet. Its clear its changed and it requires caution not panic.
Well, What if you Own Now
Managing the costs are always important in bad markets. Besides, generally, when sales are slumping rentals are raging.
MANAGEMENT TIP: During the screening process we suggest that you educate all new tenants about the need for renters insurance. Many small fires such as grease fires or other damages that fall below the deductible of your home owners can be covered by a good renters insurance policy paid for by the tenant. So a renters insurance policy can effectively remove all or most of your deductible...
Its good for the tenant too because that tenant does not go out of pocket for the damage done. Relationships remain good, the tenant's insurance has payed the landlords bill and the home owners insurance company does not have to be notified keeping premiums down.
All it requires it a good education program on why renters is good for the tenant. Get a good brochure from your insurance agent and couple that with some good articles on renters insurance and make that part of your rental packet along for your new tenants.
We know of one story where the tenant put out a cigarette on a wooden deck and caused a million in damages. The home owners did pay the landlord and then the insurance company went after the tenant for payment since they were negligent. A process called subrogation. Luckily, our smoking tenant happened to have a large renters insurance policy and now the two companies are duking it out without him.
Its Your Property