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Housing Recovery Underway, but Wild Card is Financing, C.A.R.'s EVP Tells SILVAR REALTORS(R) Tuesday, October 13, 2009
It may not seem like it, but economists are saying the housing market is beginning to recover from its downturn. We are still going to experience a lot of pain, however, and a complete recovery will depend on financing, according to Joel Singer, economist and executive vice president of the California Association of REALTORS®. “The good news is the sanity in housing has returned,” Singer told members of the Silicon Valley Association of REALTORS® at the local trade association’s annual meeting held Monday at the Computer History Museum. “The bad news is there has been tremendous dislocation - the trade-up market has been badly damaged, and although the recovery is underway, it just doesn’t feel good.” While he worries about the federal government’s “Spend Now – Worry Later” fiscal policy, troubling as it may seem - the federal budget deficit will reach $1.6 trillion this year - it is helping the economy get back on its feet. “The fact of the matter is a year ago we were looking at an economic meltdown,” Singer stated. “The market is currently reflecting more upside opportunities than downside risk, as painful as it seems.” In California, sales are improving at a faster rate than much of the country, with California topping all states with a 10 percent market share of all FHA lending in the country. C.A.R. predicts the median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year; sales for 2010 are expected to decrease 2.3 percent to 527,500 units, compared with the projected 540,000 units in 2009. Singer said a complete housing recovery and future growth hinges greatly on the extension of the home buyer tax credit and the restoration of mortgage backed securities, namely the extension of lending to higher-priced areas. “REALTORS® need to be engaged in public policy more than before,” Singer said. He pressed SILVAR members to answer the National Association of REALTORS® Call for Action and C.A.R.’s Call to Action to urge Congress to extend and expand the homebuyer tax credit. “It is critical that Congress extend and even expand the homebuyer tax credit,” Singer stressed. Singer sees prices increasing in the distressed sale markets as inventory in this range drops, but he is not so sure how the high-end markets will do because of the tight financing. “In 2010, the question for the high-end market is how do you finance it? It will be tough. We are very much at the mercy of the mortgage backed securities,” Singer said. “Will lenders step in? Will they be able to do enough to sustain growth on this end?” California is “a tale of two markets,” Singer reminded REALTORS®. “All real estate is local.” The C.A.R. executive vice president explained two neighboring counties will tell a different story in median price, as well as distressed sales. This is why he is optimistic about Silicon Valley. He sees the Valley’s high tech, export-driven economy and international travel recovering. He sees buyers, even on the high-end, eyeing opportunities. “California real estate sells itself,” Singer stated. “Here you have the most educated workforce, the best location in the country, a beautiful environment. If you are a buyer in any range, you will do well.”
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. For further information, please contact Rose Meily at SILVAR Public Affairs, e-mail , or phone (408) 200-0109. |
