Once and For All, Which Way Are Home Prices
Headed?
One could get dizzy looking
at the daily headlines pertaining to home prices. One report says prices are
heading up and the next day, another says they are still falling. Here are two
recent examples:
National Association of
Realtors Chief Economist Lawrence Yun addressed the issue at the National
Association of Real Estate Editors conference in
Denver:
“This time next year,
there could be a 10% price appreciation. I would not be surprised to see
that.”
At the same time, Gary
Schilling, president of A. Gary Shilling & Co., has been very
outspoken about his belief that prices will continue to
fall:
“Excess inventories are
the mortal enemy of prices…I’m looking for another 20% decline and that is what
it would take to bring them back to the long-term
averages.”
The vast difference in what
two experts believe causes confusion for both buyers and sellers. This
uncertainty can create doubt as to whether or not they should act now. It is the
real estate professional’s job to create clarity when it comes to future home
prices. But how?
You must take into
consideration three things in order to help determine where prices are
headed:
1.
The months’ supply of visible inventory (homes
currently on the market
2.
The months’ supply of shadow inventory (distressed
properties about to enter the market)
3.
What the majority of housing experts
project for home prices going forward
And each market is different.
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