Real Estate Round-up
The housing market will improve (by 2015): Until then, real estate agentsembrace moonlighting
There are 20,000 Realtors in New Orleans. And everybody is asking the same question: "Is the worst over?”
The real estate market has been on a bad run. Fewer homes are being sold and we are moving into the sluggish winter months.
I’d come to the Big Easy for the annual convention of the National Association of Realtors looking for answers. I wanted to have breakfast at Brennan’s, enjoy a bowl of turtle soup laced with sherry and check out the post-Katrina hubbub on Bourbon Street.
The good news is New Orleans is coming back. New restaurants opened, the tourism areas appear to be completely restored and people were tossing beads from balconies in the crowded French Quarter on Friday night.
But what about the housing market? Will it ever be great again? Not as much certainty on that score.
“Right now, I think we are probably touching bottom,” says Lawrence Yun, chief economist for the National Association of Realtors. “I think people will look back to 2010 and say, maybe I should have bought a home then.”
But how long will it take to get back to a healthy market? Yun is not bold on that prediction. By 2015, things will certainly be better and home prices should be 15 percent higher than they are now, Yun says.
For 2011, Yun will be monitoring sales during this coming winter. What happens in December, January and February will show the economist if the housing market has finally pulled out of the muck. A strong winter, means we’re coming back.
The federal tax credits, which expired in the spring, had cannibalized the future sales. People who would have bought in August or September went for their home purchase in the spring to take advantage of the generous tax breaks. When the tax credit went away, so did the buyers.
Houston’s home sales in September were down 18.6 percent from the sales in September 2009, when the tax credits were in place. Those declines were similar to other parts of the country.
Yun says the market won’t really be healthy again until the massive foreclosure inventory is burned off. Having a over a million foreclosed houses dropped on the market can create a tsunami on home prices.
Nationwide, home sales will be down about seven percent in 2010. But there should be some modest improvement in 2011, although home prices won’t gain much, Yun predicts.
Low mortgage interest rates and some modest improvement in job growth are both providing a lift for the housing market for next year, Yun says.
Texas, including Houston, fared better than most of the nation in the last two or three years, Yun says. Prices escalated wildly on the West Coast, in Florida and in places like Las Vegas and Phoenix. So Texans didn’t suffer as much as some Americans in the crash.
Realtors Dealing With It
When the housing market has been so grisly, it takes a tough-skinned agent to keep smiling.
“I will share with you that it is discouraging,” says National Association of Realtors president Ron Phipps, a Rhode Island broker who was installed as the association’s 2011 President. “The reason it is so discouraging is Realtors work directly with families. And the real challenge is a lot of families are struggling, whether they are facing a short sale or foreclosure.
Phipps said membership in the realtor association has held steady and currently there are 1.1 million Realtors around the nation. The problem is with home sales so far below the peak of five years ago, there’s not as much money to be made in real estate.
That means realty agents are moonlighting.
“Many Realtors have engaged in other businesses to get through this time,” Phipps says. “But at the end of the day, even if they have to take a second job, they love the work and they value the opportunity. So when we get back to a normal market, those people will be less reliant on supplemental income.”
“I believe that Realtors in Houston do realize that our market has been one of the strongest markets in the country and we continue to be very positive,” says Margie Dorrance, chair of the Houston Association of Realtors. ”I think it's fair to say that most Realtors are going into the year-end sales period with a sense of cautious optimism as we look ahead to 2011.”
Houston’s economy has been showing modest gains in job growth and unemployment fell in September — two positive signs for the local housing market.
Houston agent Sandra Gunn of Boulevard Realty says the super low interest rates — with 30-year fixed-rate mortgages available at less than four percent — should be a driver for home sales in today’s market.
But Gunn says a lot of Houston agents are frustrated because buyers are picky and many lenders have imposed exceptionally tough restrictions on buyers applying for mortgages.
To make it even more difficult to read, some major lenders have imposed a moratorium on foreclosure sales, adding another layer of uncertainty to the market.
So when will the Houston market return to full health?
“Unfortunately I do not have a crystal ball and cannot answer that with any degree of certainty,” Dorrance says. “No one can, really.”
Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport.com.