Saturday, September 02, 2006

Signs of Housing Market Stability from Chicago Escrow and Title

Dear Bloggers:
This is a direct quote from Economic Focus, an E-newsletter from Chicago Escrow and Title:

Volume 10, Issue 32
For the week of September 04, 2006


There is considerable hope in the housing industry, supported by considerable evidence that we are nearing the end of interest rate hikes by the Fed and that the housing market slide may be reaching to its bottom.
The latter may not be immediate but several trends could be indicating renewed confidence in real estate.
1. The first of these unorthodox indicators comes from the stock market - Undervalued industry stock.
James B. Stewart with Wall Street Journal Online says it this way. "Stocks of home builders like Toll Brothers and Pulte Homes have suffered severe declines; expectations are so low that they seem good values for patient, risk-tolerant investors willing to wait for the market to stabilize. Some mortgage real-estate investment trusts, hard-hit by rising interest rates and fears of an overvalued market, have just begun to tick up. REITs like Annual Capital Management and Newcastle Investment are both about 20% above their lows for the year."
2. The second comes from the market itself - Renting vs. homeownership is leaning toward a balance.
When the cost of home ownership raises so do rents. Eventually, the two will balance out and the cost of homes will become attractive and affordable to renters.
3. The third comes from the real estate investment community - Real estate investments pencil.
As an investment, real estate will again begin to pencil out attractive returns.
Mr. Stewart says, "Property itself may also begin to be attractive, either as an investment vehicle or your own use. In some markets, falling prices for condos compared with rents are beginning to make them attractive to yield-oriented investors. It is a paradox of falling real-estate values that buyers balk at paying far less than they would have in a rising market, simply because they're afraid the value may decline further after they buy. All of a sudden they’re market timers, aiming for an elusive bottom."
"As usual, and especially for first-time buyers, I don't believe in trying to time the real-estate market. If you like something, it fits your budget, and you plan to be there for an extended period, stop worrying about where prices are headed. Instead, be grateful you weren't buying a year ago."
While these are not indicators of where the market is they could foretell where the market is trending and thus give us advanced notification. Keep an eye on these trends.
Jill Speitel
Direct: 805-656-1300
Cell: 805-207-4303
5675 Ralston Street
Ventura, CA 93003
Direct: 805.656.1300
Fax: 805.644.7623


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