August 04, 2009

WHEN WILL WE BOTTOM OUT? GOOD NEWS IS SLOWLY COMING!

With so much talk about health care, we often forget that it will be real estate that will lead us out of the recession that we are in. In yesterday’s blog we reviewed by zip code how prices have diminished in almost every zip code. No areas of Salt Lake County saw an increase and only Orem in Utah County saw a 5.3% increase. In Davis County, Kaysville and Centerville showed modest increases of about 2%. North Ogden and Riverdale also showed increases of 2.1% and 2.4%.

Lowering prices means greater affordability for buyers. Low interest rates and lower prices make this the perfect buyer’s market. The market may be showing signs of reaching the bottom but prognosticators do not know exactly when the market will rebound. Some pundits felt that the recovery would start in 2010. Others predict that it will take longer and estimate a return to a normal market to be in 2013. Almost everyone believes that the recovery will be a moderate increase each year and will likely take six to seven year to get back to 2006 highs for property values. Click here for more on this point.

As much as we want things to return to normal, we likely will see appreciation rates near normal levels of 5%-6% per year rather than the 89% growth rate we saw from 2000 to 2006. This is the best news we could have given the current economic conditions. As long as employment numbers remain high that means that foreclosures will continue to plague the marketplace. The absorption rates (the rate at which houses are being sold in the market place) are coming down and gradually tipping in the seller’s favor. It is still a buyer’s market but the bottom and possibly the shift to a more balanced market is on its way.

For more information on using real estate investments try this link. For more information on home prices in your neighborhood please contact me.

Posted By: Steve Randall