Seeing the real estate market future…

What are the experts saying about the real estate market in 2011?

From the Home Buying Institute Web site comes this summary -

Current consensus: Home-buying activity will rise slightly in 2011. Home prices in most areas could decline another 6 – 9 percent in 2011. Mortgage rates will gradually increase between now and the end of next year, reaching or exceeding 5 percent. Unemployment will continue to be the biggest drag on the housing market. Foreclosure moratoriums or “freezes” will also delay housing recovery.

The Home Buying Institute has apparently been collecting the learned predictions of as many so-called experts as they can find. There is a nice long list of entries from various experts at the site. Based upon the collective knowledge and predictions of all of these experts the HBI compiled the consensus statement that is shown above.

I guess this does not come as any big surprise. It’s fairly consistent with what I’ve been telling my clients. In my little market area unemployment (or fear of becoming unemployed) is still the biggest single factor that is holding back the so-called “pent up demand” that so many optimists point to as the rationale for their rosy predictions.

The pace of value decline has slowed dramatically in this area and the 6-9% decline forecast that the HBI sees in their outlook seems to be consistent with what we are seeing. That is down from double-digit rates over the past few years.

We are still experiencing distressed sales as a large portion of our overall sales. We closed out 2010 with distressed sales still representing above 50% of our sales locally, as opposed t about 35% nationally. We also are seeing a high percentage of leases – about 25-30% of all “sales” are actually closings on leases.

I see stories in the local papers quoting economists from Zillow or Trulia or other representatives of large, national companies. Most local Realtors poo-poo those stories and tell their clients that those national level guys don’t understand the local markets. Many local Realtors especially take exception to the Case-Schiller reports. Those reports are based on data reported from local boards and MLS’s across the county or from data gleaned from Public Record Databases, so they really do reflect what’s going on locally.

The thing to remember is that these big national companies aggregate all of that data, so the little local market statistics get subsumed into the bigger picture. It may well be that a particular little sub-market – a town, a subdivision, even a county – may be a point off the curve that the overall data shows. That’s where your local agent can add his/her value to the home buyers and sellers. In order to do that, the local agent has to keep up with what’s going on in the local market.

I do on a weekly basis to research and record the sales data from my little 6 township market, but some effort is required and that means committing time each week to do the work. I track all of the sales of homes above $20,000 in my market area on a weekly basis. I chose the $20K lower limit as a means to exclude leases and sales of tear-downs from my data. There are places nearby where home values have actually fallen so far that one can buy a viable house for prices between $10-20K, but generally not in my market area. I may need to revisit that cutoff price for 2011, since local home values continue to fall. I have yet to record the first week of sales for 2011, so I can still make changes.


I also keep the old monthly sales data on-line at my Web site and now have over three years of back data available for most of the townships (I added a couple this past year, so only one year’s worth of data is there for them). I’ve been tracking things like listed vs. sold prices, sold prices vs. taxable value (what the local assessor says the place is worth) and derived data like listed price per square foot and sold price per square foot. Having that data available when I prepare for listing calls or when I’m negotiating on behalf of buyers has proven to be very valuable.

So, I can look at the market reports that are based upon the national databases from Zillow or Trulia or NAR or Case-Schiller or whoever and make my own case, based upon my own data for what that means (or doesn’t mean) in our local market. The value that might be gleaned out of those national reports has more to do with the overall view that they get of the economy than any conclusions that they express about the local real estate market – that’s my turf and I have my own data for that. To see the market reports that I update weekly, go to my Web site - www.movetomilford.com and choose the Real Estate Statistics choice or the What's Sold Locally choice.