Many people today are asking this question, “Where is the bottom?”
The media continues to be blamed for pushing out negative news, as if the news agencies made all those nasty loans! Many of the industries related to real estate and the current crisis emphasize;
“Look for the positives; it is a great time to buy”.
June 2006, a local real estate broker adamantly said to me, “Stop talking that way about Mesquite, this is Mesquite and the prices WILL NOT COME DOWN IN MESQUITE!” Interestingly that broker still has many of the same properties listed for sale (2 years later) and is sticking to that story, no price reductions, also NO SALES! Now, those properties don’t just look over priced, but grossly, ridiculously over priced. Is this being positive? What ever!
So let’s talk about a bottom, will the bottom be in terms of improved numbers of;
Number of properties listed?
Number of properties vacant but not currently listed?
Number of vacant properties as a whole?
Number of closings per month?
Number of contracts going into pending monthly?
Number of households falling behind on the mortgage payments?
Number of NOD’s being filed?
Number of bank owned inventory (REO’s) for sale?
Number of bank owned property actually selling and closing?
Number of foreclosure proceedings pending or actually being completed?
Number of month’s inventory out there?
How about consumer confidence or sentiment?
How about the number of new home building permits being issued?
How about the number of whole subdivisions going into foreclosure?
We have reached and past one bottom, “Easy to obtain mortgage money”, actually we passed that bottom some months back, and that is going to make getting past the rest more difficult, in the near term it will only get tougher to borrow money!
For most people the term “Bottom” means when will their home value quit falling, level off and then begin to appreciate again. This definition of the bottom will likely only arrive when most, if not all the other trends turn around and begin to make progress in the right direction. Most of these other trends could be called neutral at best today, and many continue to go the wrong direction. It appears to me, it is going to be some time before the “Bottom” for most actually arrives. Even then, we may be talking about homes that are worth two thirds of what they were two or three years ago. For some, the term “bottom” represents prices rising back to those old numbers!
We are seeing sold and closed prices that I believe, we will look back at, and say those were near the bottom numbers but those sales are still too few and far between. The average asking prices and the consumers idea of what their home is worth today appears to remain a long way from reality or a bottom. So for many the “Bottom” may remain an illusive concept shadowed in denial and wishful thinking.
Footnote: If you are not planning to sell or use your home as an ATM, don’t worry about the market, eventually it will be OK!
Chris W. Miller
ERA Brokers Consolidated
Mesquite NV 89027