Word From Another Real Estate Guru. Where Do These People Buy Their Crystal Balls?

Another real estate guru/prognosticator has opened his mouth and told the world that the market is now a mere nine months away from bottoming out. Seems like we've heard that same kind of thing before, doesn't it? I guess if you keep saying it, eventually the prediction will come true and you'll look like a genius.

Now we hear from one Brad Hunter. Hunter is the director of consulting for MetroStudy. MetroStudy is an outfit that tracks new home sales and market conditions, and he was talking about new homes when he made his comments. Hunter's crystal ball says we're now nine months from seeing the bottom of the market. He made this prediction in a talk at the Southeast Building Conference in Orlando recently. I wonder if that's where he bought his crystal ball ... maybe one of the gift shops at Mickey's place.

I hope he's right.

I fear he's wrong.

Here's why.

In order for the market to reach bottom, buyers have to re-enter the market in sufficient numbers to establish a new base-line of prices.

Buyers, you see, are going to define the new market bottom for real estate through their offers on property. When sellers accept those offers on a regular basis, we will know what the bottom of the market is. We can then say that a new market value has been achieved and that the market has "bottomed-out".

You do not need a degree in economics to know that in a free-market society that's the chain of events that needs to take place in order for the market to reach and re-define the bottom.

While there has been some uptick in the number of homes sold during 2008, the big influx of buyers necessary to establish new pricing base-lines has not yet been felt in the market. And there are three important factors stopping it from happening nationally, plus two more important challenges that may keep it from happening in Florida within the next nine months. Here they are ...

1. Buyers are finding it extremely difficult, if not impossible, to sell their existing homes.

2. Buyers are extremely hesitant to buy property at today's prices when they feel prices are going to continue to fall.

3. Buyers are struggling with tightened mortgage lending standards.

In addition, Florida buyers have to face two additional problems.

4. The cost and availability of property insurance.

5. Continuation of questionable property tax policies.

I am going to grant you that items 4 and 5 have had some positive changes in the past year or so, but more work needs to be done to stabilize these matters before buyers once again feel comfortable that insurance and taxes will not drive the cost of home ownership beyond their personal budgets.

I guess you could almost include a sixth problem: the overall U.S. economy. If a true recession comes our way, how many people do you think are going to be interested in buying real estate? I've seen recessions in the past. People are concerned about such basic things as keeping their jobs and buying basic essentials for their families. It can get real ugly real fast, and take a long time for things to get back to normal.

Anyway, be sure to mark you calendar for nine months from today. That's the day the market bottoms out, buyers start flooding real estate offices and model home centers, mortgage brokers start taking applications, title companies become overloaded with closings, home inspectors have to hire appointment secretaries, and sellers can get happy again. Let's see, that would be about the middle of next May, right?

I can hardly wait!

For more information on real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.

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