Facing Down The “800 Pound Gorilla”
The housing market has been in the doldrums for 5 years. Is there an “800 pound gorilla” on its back, holding it down, and if so, what is it? A Gorilla not only fell on the crashing market several years ago, it squashed it. The culprit was a Federal Government set of policies which changed the American Dream of home ownership to the American Right of home ownership. Both The Clinton administration and the Bush Administration can be faulted for this.
The government decided that almost everyone should own a home, and put in place policies to insure that. That idea was embraced by everybody. John Doe could own a home even though he could not afford the mortgage. The banks were for it, as they made lots of money. Loan brokers did more transactions. Realtors sold more homes. There is ample blame to go around. We all were part of the problem.
Since the market crash, what has prevented housing’s recovery? Initially, the 800 pound gorilla took on several forms. There was a lack of mortgage money to finance home purchases. A flawed home appraisal process contributed to the problem. Both of these initial problems were caused by overly zealous regulators, who, while attempting to fix the problem, actually made it worse. And third, banks proved to be inept in handling distressed properties and getting them quickly through the pipeline (both short sales and bank owned).
All three of these factors have been significant in delaying the housing market recovery. However, all three factors have improved over the past five years. Still, the housing market has not experienced significant recovery. Why? The 800 pound gorilla, presently sitting squarely upon the housing market, is now the employment market.
The August 2011 unemployment rate was 9.1%. A more significant rate, to include those underemployed and those who have given up looking, is over 16%. The August employment report was one of the worst ones we have seen recently as there were no jobs created (net) in August. The entire nation is experiencing angst regarding the labor market.
Unfortunately, while home sales do create jobs, Realtors cannot create jobs. The nation is beginning to wonder who can. Frankly, if a person’s current employment situation is tenuous, my counsel is to stay on the housing market “fence”. However, if you believe your employment situation is secure, or you are an investor looking to park your funds in a wise investment, my counsel is to buy real estate now.
In 2015, or 2020, I believe that buyers who passed up this current buying opportunity will be lamenting their decision. Now is the time to buy. Forget about the national numbers which suggest values are still declining. Real Estate is a local business and this local market is not a declining market. Many neighborhoods in this local market are seeing rising values. Even if you believe this local market is declining, and is getting close to the bottom, studies clearly indicate you are better to buy as the market nears bottom, then to wait for the time when clearly the market is rising.
Currently you have ample inventory to choose from, excellent values, historically low interest rates, and very motivated sellers. The cover of Time Magazine ran headlines which spoke of impending disaster for our economy and the housing market. That cover story hit the newsstand in 1992, at the depth of the last housing crash, right before the beginning of 12 years of spectacular growth in the housing market. Buy now!!