Have Housing Prices Bottomed? News Reports Across the Web Say 'Yes', But.....
Speculation about the bottom of our housing crisis has been debated for many months now, and almost every day a report that either supports a bottoming of the market, or attempts to debunk it comes across the news wires. But these reports, that use all kinds of technical data that can be viewed in many different facets, ignore a few common sense aspects of a possible bottom of the housing crisis and what it means to buyers.
First, housing prices and sales, as any competent real estate professional can tell you, is localized. What is happening in the California real estate market can be extremely different than, say, the Florida or New York real estate markets, or the Oregon or Colorado real estate markets. And these comparisons are by states. The same could be said about city comparisons, or even community and complex comparisons.
When we say real estate is "Location, Location, Location", it's because the location of a community or house can vary in quality, amenities, HOAs, special assessments, local and/or state taxes, etc. etc. etc.
Second, all markets are inherently volatile, with highs and lows. Just like the stock market, the housing market has the same highs and lows. But its just more difficult to see the changes in the housing market because buying a house can take much longer than buying stock, or a sweater, or even a car. But the housing market is the same as any other market that exchanges goods and services for money.
So, housing prices and sales can, and will, fluctuate from month to month, and year to year. It is the true nature of any market.
Plus, the reason for buying a house IS different than buying a stock, or a sweater, or a car. Stocks are bought and sold in efforts to make a profit. A sweater is bought to keep you warm. A car is bought for transportation. And a house is bought for shelter- a place to live. Yes, I have simplified the reasons a bit, but in generality, these are the reasons why these types of things are bought and sold.
So really, when considering the purchase of a home, you need to examine if you fall within the simplistic reason for buying a house. If you're buying it to make a profit, or to make rental income, this could change your position and opinions.
And lastly, other factors always will affect the housing market as a whole, and individual areas and homes. These types of factors are government policy, which includes state, federal and local governments. What the Federal Reserve does, what your state does and even what your community does, all dictates housing prices and sales.
Social opinions and trends also affect housing markets. Other factors that have an effect on housing:
- Interest Rates
- Jobs and Unemployment (including fears and expectations of the job pool)
- Construction and Improvements or Dilapidation of Structures and Areas
- Corporate Locations or Relocation
- Housing Trends, and Where People Choose to Live (In big houses, smaller houses, Planned Unit Developments, Apartments, etc.)
So what does this all mean? What can we take away from this discussion? The U.S. housing market is both too big, too multi-faceted, too volatile to place a pin-point on a bottom.
It must come down to individual reasons and preferences when determining when the right time to jump in is. It must be about you examining what works for you, and what doesn't. Anything other than that is just irresponsible.
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