There isn't any way to sugar coat just how bad the market has been in 2007; it's one of the worst years on record. But what's next?
Well, our problem is one of supply, not demand. Buyers are out there – they're either waiting for signs that we've reached the bottom, or they're stuck in their current home they can't sell, but they're out there.
But inventory is a different story – for every one home that sold this year, more than one new listing has replaced it. As soon as that trend goes in the other direction, our market will begin healing. Here's where we're at:
Investors rushed the exits – the crazy market in 2004 and 2005 was driven by investors. And as the party slowed down they headed for the door (in droves). This is why inventory levels rose throughout 2006 and 2007. Today, every investor who wanted to put his house up for sale has done so; this wave is over.
Short Sales and Foreclosures – investors who bought late in the frenzy, say July, 2005, using low-introductory rate ARMs with first payment due-dates in September, 2005, had their payments reset in September, 2007. This started the "Oh Sugar Honey Iced-Tea" moment when they realized they were in trouble. By now they're already 3 months behind, and the foreclosure process has begun. By March, the property will be sold at a Trustee Sale (and probably purchased by the bank.) Some of these investors are already in the market, trying to complete a Short Sale. Either way, the largest part of the wave should hit the market in the next few months.
Both A and B – On a positive note, many of the properties which are going through the Short Sale process today, and which may or may not end up in foreclosure and a Trustee Sale this spring, are those same properties that the investors tried to sell unsuccessfully in 2006 or 2007. This means that they will effectively move from one part of "Inventory" to another, without having any impact on the overall inventory levels. (they've already been counted.)
At some point, and probably this spring, "the market" is going to run out of surplus houses to throw into the inventory. Once that happens, each sale will be replaced by less than 1 new listing, and the market will begin a slow, but very obvious, recovery.
My $0.02, anyway.
Your looking forward to summer Realtor,
[tags] market forecast, short sales, foreclosures, recovery, Fletcher Heights [/tags]