Monday, May 19, 2008
Wow! Even Lawrence Yun, the Chief Economist for the National Association of Realtors, is getting on the "let's get the price declines over with" bandwagon.
In this fine LA Times report by Maura Reynolds, when asked about plunging home prices, the usually upbeat Yun noted, "Peak to trough, we'll be looking at 20% or even greater" and then continued with, "Because the prices are going down so fast, we'll be hitting the stabilization point sooner".
When you think about it, maybe it does make a lot of sense to encourage the downward move in asking prices - stubborn sellers certainly aren't going to wake up to this reality without the help of the real estate sales industry and six percent of something is a lot better than six percent of nothing.
The Times report covers all the bases on the growing realization that maybe it would be best if home prices were allowed to reach more reasonable levels sooner rather than later.
The hard truth is that the housing correction is turning out to be deeper and longer than nearly anyone anticipated. And that's bad news, not just for homeowners and would-be home buyers but for pretty much everyone.The latest DataQuick real estate sales figures for Southern California should be out in the next day or two.
With every month of lower home prices, homeowners see their net worth decline. Potential purchasers are paralyzed by a lack of financing and by the fear that if they buy before the market hits bottom, they will lose money too.
Thomas Lawler, a housing economist who runs a consulting firm in Leesburg, Va., noted that in the last housing price correction, which occurred in the early 1990s, it wound up taking prices seven years to drop 20%. Compared with that protracted slump and recovery, he thinks the current free fall in home prices is a good thing.
"Do you want a slow bleed?" Lawler asked. "Wouldn't it be nice to just get it over with? It might be that that's what we're seeing."
Who knows what's in store for the month of April. Here's what it looked like as of March.