{"id":40768,"date":"2013-07-29T11:43:10","date_gmt":"2013-07-29T18:43:10","guid":{"rendered":"http:\/\/theavtimes.com\/?p=40768"},"modified":"2020-08-12T13:32:22","modified_gmt":"2020-08-12T20:32:22","slug":"where-real-estate-is-heading","status":"publish","type":"post","link":"https:\/\/theavtimes.com\/2013\/07\/29\/where-real-estate-is-heading\/","title":{"rendered":"Where real estate is heading"},"content":{"rendered":"
\"Roe<\/a>
Roe Leer<\/figcaption><\/figure>\n

By Roe Leer, president of the Greater Antelope Valley Association of Realtors \u00ae.\u00a0\u00a0<\/strong><\/em><\/p>\n

With six years of housing volatility behind us, it\u2019s not unreasonable for current and prospective homeowners to ask, \u201cWhere are we heading?\u201d\u00a0 Our take is that historical trends are better prognosticators than crystal balls.\u00a0 While we may be able to agree that bad policy and wishful thinking did much to lead us to a housing bubble, too many of us thought that bubble would never burst.\u00a0 When it did, even more of us took on the mantle of pessimism.\u00a0 Real Estate does have a certain rhythm and only when certain fundamentals skew in one direction or the other can we expect the unexpected.<\/p>\n

The collapse of the housing bubble in 2007 impacted not only real estate sales volume, but home valuations, mortgage<\/a> markets, home builders, home supply retail outlets and hedge funds held by large institutional investors and banks.\u00a0 This cascade of impacts led the U.S. Secretary of the Treasury to call the bursting housing bubble \u201cthe most significant risk to our economy.\u201d\u00a0 The crash of 2007 was the steepest plunge since the 1989 Savings and Loan crisis.<\/p>\n

So what did we learn?\u00a0 Bubbles may be identifiable in progress, but can only be definitively measured in hindsight, after market correction.<\/p>\n

Recently, GAVAR undertook a 20 year review of housing trends in the Antelope Valley.\u00a0 The review clearly revealed an aggressive uptick in the number of houses sold from 1994 to 2005. In roughly this same time frame the average selling price for a home in 1994 was $105,434 versus $349,802 in 2006.\u00a0 The 2007 crash should have been predictable, as the figures were unsustainable.\u00a0 The disappointment for many was that the fall was a hard landing.\u00a0 Hindsight tells us that there was much that could have been done by policymakers, lenders and others to mitigate this volatility.\u00a0 Within two years of the crash, there was another run-up in the number of houses sold in the Antelope Valley.\u00a0\u00a0 But that number, too, fell by some 30%-35% from 2009 to 2012.\u00a0 As the industry has labored to process an unprecedented number of foreclosures and many homes are yet to return to the market, both industry professionals and homeowners are curious as to the future.<\/p>\n

And foreclosures in the Antelope Valley have been significant.\u00a0 Bloomberg News cited an analyst in 2007 who suggested a direct linkage between increased foreclosures and localized housing price declines.\u00a0 John Kilpatrick, of Greenfield Advisors said, \u201cLiving in an area with multiple foreclosures can result in a 10% to 20% decrease in property values.\u00a0 It can wipe out the equity of homeowners or leave them owing more on their mortgage than the house is worth.\u00a0 The innocent houses that just happen to be sitting next to those properties are going to take a hit.\u201d<\/p>\n

Statistics have a way of telling a story.\u00a0 While home prices continue to climb, a lack of inventory is still impacting sales.\u00a0 It is interesting to note that the average home price in 2001 was $79 per square foot.\u00a0 That number rose to $208 per square foot in 2006 and fell to $75 per square foot in 2012.\u00a0 What we\u2019re seeing is an ongoing recovery in housing and mortgage markets, with fewer distressed properties available, improved home prices and a pick-up in home purchases.<\/p>\n

So, is a new bubble forming?\u00a0 No.\u00a0 Home prices remain undervalued relative to fundamentals and much lower than in the last bubble.\u00a0 That\u2019s why today\u2019s price gains are considered a rebound, rather than a bubble.\u00a0 Economists reason that prices are determined by the ratio between supply and demand, and 1) supply is beginning to increase, 2) some speculative investors will begin to back-off as prices begin to rise and 3) as mortgage rates rise, a lower pool of qualified buyers will participate in the price bidding.<\/p>\n

The conclusion we draw from analyzing 20 years of data is that real estate is transitioning from unstable to stable and that this should provide reassurance and opportunity to all who participate in the industry.<\/b><\/p>\n

–<\/p>\n

Disclaimer<\/span>: The views expressed in this article are the author\u2019s own and do not necessarily reflect the views of The AV Times.<\/em><\/h4>\n

Email letters@theavtimes.com<\/a> to submit a story to Your Issues | Your News<\/em>.<\/em><\/p>\n

\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

By Roe Leer, president of the Greater Antelope Valley Association of Realtors \u00ae.\u00a0\u00a0 With six years of housing volatility behind us, it\u2019s not unreasonable for current and prospective homeowners to ask, \u201cWhere are we heading?\u201d\u00a0 Our take is that historical trends are better prognosticators than crystal balls.\u00a0 While we may be able to agree that […]<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1480],"tags":[],"_links":{"self":[{"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/posts\/40768"}],"collection":[{"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/comments?post=40768"}],"version-history":[{"count":0,"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/posts\/40768\/revisions"}],"wp:attachment":[{"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/media?parent=40768"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/categories?post=40768"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theavtimes.com\/wp-json\/wp\/v2\/tags?post=40768"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}