by Gene Wunderlich
That eye-catching title was the subject of a presentation by highly regarded business leader and motivational speaker Stefan Swanepoelat our recent National Association of Realtors® conference in New Orleans. While Stefan’s message dealt more with technology trends that will soon shape our lives, the title could just as easily have been applied to several of the presentations we had, including that of our Chief Economist, Dr. Lawrence Yun, political prognostications by Mark Halperin and John Heileman and many of our other legislative discussion. Sunny with a chance of catastrophe!
Of course the recent election was much on everybody’s minds and what that means to the nation and to the housing market. Once again the National Association of Realtors® was the largest direct contributing PAC in the country with over $20 million disbursed, and we preserved our bi-partisan status by investing 51% of that with Republican candidates and 49% with Democrats. At the federal level we enjoyed an 87% success rate with our candidates while our local association scored in 17 of 18 races we participated in.
Now let’s talk housing. On the October charts, sales continue at an unspectacular pace while prices have softened even more. Both sales and median price dropped from the previous month for the region as well as the state. Our median price is just 1% ahead of 2013 – Temecula actually dropped 6% from last October. Depending on who you believe, there’s more bleh news ahead. There’s nothing to indicate a surge before year-end and catapult us out of these megrims. If there’s an upside to this it’s that there’s no longer any discussion of another housing bubble.
In a recent survey of 100 real estate experts and economists, 40% believe it will take another 3 – 5 years for the market to return to ‘normal’ based on current home sale and price trends, while another 30% think it will be at least another year or two. Just 20% think we’re back to normal or will be in the next 12 months.
We were reminded at the conference that there are really only two people in the entire country who understand how the economy works, and they disagree.
According to Chief Economist Dr. Yun’s, the reasons for the lagging market are myriad including things we’ve talked about before like the slow rate of household formation; the lowest rate of homeownership since 1995; the lowest rate of first time buyers since 1987; millenials opting to live at home longer; move-up buyers stymied by continued lack of equity; a challenged economy with slow job growth and slower income growth keeping renters in their rentals indefinitely and retirees staying in their homes longer.
Zillow’s Chief Economist Stan Humphries recently concluded, “We’ve reached a point in the recovery where the only real cure is time. The landscape is slowly changing as incomes begin to grow, negative equity fades and new households start to form. These shifts won’t occur overnight, but they are happening. Patience will be a virtue over the next few years as we wait for these traditional fundamentals to more fully take hold of the market.”
Well, patience may be a virtue but it would sure help if you all went out and bought a house TODAY!
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/.