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REALTOR®: NAR Projects Housing Market Will Pick Up in Second Half of 2008

Wednesday, May 21, 2008

Home sales and prices throughout many parts of the country should see improvement in the second half of 2008, although recovery will vary by market, National Association of REALTORS® Chief Economist Lawrence Yun told Realtors gathered at NAR's Midyear Legislative Meetings & Trade Expo held early month in Washington, D.C.

Yun attributed most of the softening of the housing market over the last year on the "subprime mess," and noted, "If you look at where home prices fell the most, it's the markets where subprime loans were prevalent."

He pointed to Cape Coral, Fla.; Detroit; Las Vegas; Miami; Orlando, Fla.; Phoenix and Riverside, Calif. as the cities with a high percentage of subprime lending and where the markets suffered the biggest downturns.

It is important to keep the state of the housing market in context, he said. Although much of the media has focused on the rate of foreclosures doubling this year, Yun noted the foreclosure rate has gone from 1 percent of all homeowners with mortgages to 2 percent. He said more than half of today's foreclosures are concentrated in the subprime market. Majority of homeowners are making their mortgage payments on time.

The NAR chief economist does not see a recession happening at any time this year. "A slowdown, yes, but the definition of a recession is two consecutive quarters of negative GDP growth. It's not in the cards – no matter how you look at it," he said.

Leannah Hunt, president of the Silicon Valley Association of REALTORS® (SILVAR) and a Realtor with Coldwell Banker in Palo Alto, said the Silicon Valley region has not been deeply impacted by foreclosures compared with other parts of the state and some parts of Santa Clara County. The market has remained healthy in neighborhoods within the association's districts - Menlo Park, Atherton, Palo Alto, Mountain View, Los Altos, Los Gatos, Saratoga, Cupertino and Sunnyvale.

"The Silicon Valley region is fortunate because the local economy here continues to be strong, there continues to be job growth and the excellent schools in these neighborhoods continue to attract many families," said Hunt. Hunt and other SILVAR officials were among the more than 9,000 Realtors and guests who attended the NAR conference.

Hunt sees the housing market is strengthening as loans insured by the Federal Housing Administration and those purchased by Fannie Mae and Freddie Mac have become viable options for buyers. Realtors continue to seek legislation that would modernize FHA programs, reform regulation of the government-sponsored enterprises (Fannie Mae and Freddie Mac), establish a first-time home buyer tax credit, and make the temporary increases to the conforming loan limits established by the Economic Stimulus Act of 2008 permanent. They believe these measures would quickly stabilize the housing markets.

"It's a good time to buy, with interest rates still very low. Since markets vary even across the county, I would encourage anyone who is interested in buying a home to contact an experienced Realtor who is knowledgeable about the area you are considering," said Hunt.

"There are many reasons for people to get into the housing market today, and very few reasons not to. With the plentiful supply of homes for sale at affordable prices, interest rates approaching 40-year lows, and the strong track record of housing as a good long-term investment, conditions are ripe for buyers," Yun added. "Those are the facts, plain and simple."


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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