Our Real Estate is Local, Our Buyers are National

Our Real Estate is Local, Our Buyers are National

The local housing market is showing signs of stabilizing, based on anecdotal evidence of new mortgage applications and activity at local title agencies; and some “running of the traps” by yours truly. I have also seen resistance by sellers to go below certain price levels and first time home buyers are being enticed back to the market with attractive interest rates and attractive buyer incentives. Sales center traffic is up and buyers are making deals.
Locals mostly agree that Lee county feels the pain last and heals the quickest, based mainly on the steady influx of new buyers retiring (Remember Baby Boomers?)
But are we in for a recession? It seems there are many pundits on each side of this issue, but put me on the side of the fence that is looking for a slowdown, and rather short lived at that, rather than a recession.
I believe we will still see some softening of housing prices, especially in some pockets, but in general they are beginning to stabilize and indeed in some niches like waterfront, increase.
“If my house is not selling at $500,000, why not have it “not sell” at $550,000?” These sellers are creeping up the price perception within communities. They figure if they are going to wait for a buyer, they might as well get the higher price. They may be right.
I tried last week, rather unsuccessfully perhaps, to get the point across that we need to think outside of our box. Our buyers will come from out of town and are not jaded by the negative publicity about falling prices and over inventory. The fall in prices, by the way, was just from the just the froth. The froth in high prices that had no substance in true value but was based more on speculators “whipping up the mix”.
Here are some of the reasons I believe we will not see a recession:
The inverted yield curve. While most inverted yield curves (Short term rates higher than long term rates) preceded a recession, this time our short term rates are not high, rather it is the long term rates that are low.
Credit is ample and cheap. Rates are still low and lenders, while tightening up on the sub-prime market, will not get hurt badly by the foreclosure rates on mortgages because they have sold that debt into the market. They are still aggressively pursuing debt. (By the way – I just got a new car loan at less than 6%!)
Inventory is being curbed. Housing starts are down and builders are not fueling the fire with an over abundance of single family homes and condos. Auto and manufacturing inventory is being curbed not because of interest rates but because of a correct and speedy response to demand softening. Manufacturers ability today to track and respond to demand is unparalleled in history.
US Exports are up. This is a result of the strong economies of our trading partners.
Retail sales are strong. The November results are above expectations over October (up 1%). Locally malls are reporting heavy traffic and strong sales.
Bond yields have jumped recently. (This indicates investors are more optimistic about the future)
Unemployment rate is low and looks like it will remain low.
Price decreases in the housing market lately were just “from the froth” of the last speculative drive up in prices.
Pressure on prices at the pump for gasoline have been alleviated
I am constantly reminded about the difference between local perception in our market and the perceptions from an outsider. Folks, we are still booming here. Ask any visitor from the north. Right now we have an absorption problem, but that is an insider view. To the outsider we have ample choices for their second home, fantastic weather, attractive financing, great restaurants, beaches, golf, and shopping. The high inventory is not a problem to them, but an advantage.
Two years ago buyers were being asked to buy in areas that were not served well by retail. Now, the retail developers have responded well to anticipated growth and have built new malls and neighborhood centers. Now the buyers can still get great deals and they don’t have to hope for the retailers to come. This is a big difference from now and two years ago.
This season is a great time to buy a second home and in a few years from now we will be looking back and kicking ourselves for not buying now, locking in both low prices and low interest rates. Our commercial business is very strong – both from investors and end users.
(If you still think our market is local, wait until Boston Red Sox Spring training starts and Daisuke Matsuzaka starts bringing in the tourists from Japan).
Lee County only recently topped the 500,000 population mark. This is a watershed event in our growth and has put us on national and international economic radar that we were not on before. Our prices and attractions are SOOOO much better that the west coast of the US. Matsuzuka will bring us exposure to a market that in the past has largely ignored us. (Thank you Red Sox)
In macro economic sense, Lee County is thriving and shows great promise in all indicators. This “bad time” in the housing market is just a spacer between good times. It will not last long and then I suggest you hold on and get ready for explosive growth.
Let us help you with your home buying needs. If you decide to sell, let us counsel you.
If you are interested in commercial investments click here.
Gregg Fous
Gregg@ma-realty.com