Are we in recovery or waiting for the next wave?
The patient has been quite ill. So ill, in fact, that flowers were ordered and last rites given. But the real estate market, that grand old dame of the United States economy is not dead yet, and looks like she’s starting to breathe on her own again.
At the end of July, The New York Times, Wall Street Journal and most major media outlets ran stories about the housing market showing signs of recovery. The Times led with this paragraph, "After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilizing prices, generating hope that the real estate market is beginning to recover."
The basis for this statement is that eight U.S. cities showed price increases in May up from four in April and one in March. This is three consecutive months of sales growth, in addition to new home sales increasing in June by the largest percentage in eight years. Sale prices are also showing signs of stabilizing with smaller declines and even some very modest gains in certain regions.
Does this mean we’re at the bottom? As usual, it depends on who you talk to. Some economists and lenders, like Wells Fargo, believe we’ve found the bottom and the recession is over with the economy in recovery. Maureen Maitland, vice president for index services at Standard & Poor’s, has even speculated that we may look back on April 2009 as the trough in home prices.
Others say the real estate market is just taking a time out before another wave of adjustable rate mortgages reset dumping more foreclosures on the market. The skeptics also point out that whatever life there is in the market is coming from speculators and investors who are buying low and are looking to either flip the property or turn it into a rental while they wait for the market to come back.
The National Association of Realtors, however, feels the market is perking up, partly because of the first time buyer’s tax credit of $8,000. They are lobbying for the current credit, which expires in December, to be replaced with a $15,000 credit hopefully keeping the energy flowing.
Local real estate brokers also see an increase in activity, especially on Anna Maria Island. With homes and condos selling at 2003 prices or less, there are opportunities galore. And if it’s true that the market is starting to turn around because of investors with an eye towards renting, then every property that’s for sale on Anna Maria is sitting pretty.
And as much as we may want to keep Anna Maria our little secret, newspaper articles, like the one in The New York Times last month, are an incredible boost to our local economy. With seasonal, vacation and now even weekend rentals so much in demand, investors or second home buyers are looking at the Island as a potential cash cow in addition to a spectacular place to live.
So as a relative of mine recently told me, “Put away the black dress.” The patient is out of intensive care with recovery just around the corner. No flowers necessary.
