Editorial from the Big Guy: Market Improving
The owner of the company where I work in Middle Tennessee came to our meeting this morning and confirmed what we’re all thinking through some real evidence: the market is coming back.
Although he believes it’ll take until the second quarter of 2009, the biggest indicator is in new construction. In my county, there were 75 more closings in new construction than “starts.” This means that the building industry may be slowing down enough to get rid of the excessive inventory of new homes. As demand comes back, then existing homes alongside more manageable new construction will stabilize the market.
Corbet Property Real Estate News agrees with this assessment, using for data the information that was reported in the Wall Street Journal,
Inventory levels are starting to slow with a prediction that when we reach a 5-month of inventory level sometime in 2009, which historically signals a tightness in the housing market, this will eventually turn around the housing market all together.
However, when we talk about a recovery we also should see what’s happened in the last two years. The big guy from my company said that although our market is off, we’re off the least. Our sales are only down 20 to 25% from the glory days of two years ago while the east and west coasts have suffered a reduction in home sales of up to 60%. Those companies are going through some painful cuts, including cutting staff, closing offices, and renegotiating the salaries of managers just to keep the doors open.
In the long view, the agents who provide solid service and are committed to a career in real estate will survive. Just as the mortgage companies who have smart lending practices in place will survive.
On the commercial side, we heard today that commercial real estate is finally beginning to slow somewhat. For example, one well-known pharmacy-type store used to allow franchises for almost zero down. Today this company requires about 20 percent downpayment.
In my opinion and from reading and hearing what others are saying, we aren’t quite out of it yet, but the big improvement is coming soon. I feel it in my bones!
