In the Monday, May 25th edition of BARRON’S, Mike Moran, a real estate broker in Sarasota, Florida has a story Titled, The Housing Hurricane Will Howl Again. His experiences in Sarasota since December 2008 could not be more different than what is being experienced by brokers and home buyers in the Washington, DC market, particularly in Northern Virginia.
The moratorium on foreclosures starting in late November 2008, for four plus months, had the effect of stopping the deluge of inventory that had been driving prices relentlessly down for over 18 months. Whether that was the intended effect, or the desired effect was just to give folks time to re-work their existing loan with their mortgage holder, it has reduced inventory and firmed prices. In fact prices are back to last fall’s level in Northern Virginia after hitting their lows in December 2008..
As prices firm and then rise, as they are now doing, buyers’ confidence rises yet again. Many buyers were already back in the market as affordability had improved dramatically and people intuitively know that housing in America, particular around Washington, DC, is a great long term investment.
So what did Mike Moran say in his article that I disagree with? Mr. Moran says that “All of the Obama administration’s attempts to revive, resuscitate and shock the housing markets into recovery have failed.” At the end of his article he states “Unfortunately, there are no signs of recovery, despite the hype and the twisting of numbers in many media reports. The end of the unofficial moratorium on foreclosures, combined with rising unemployment, signals that the back half of this housing hurricane is only just beginning.”
Mr. Moran has been right with two previous articles since 2006 correctly foretelling the real estate down turn. But this time he has missed the clear signs of a change in market psychology, pricing, inventory levels and mortgage applications, among other statistics. Loan modifications, even with their high rate of re-default, are also keeping many borrowers in their houses and reducing inventory. So with falling supply and rising demand, unless the law of supply and demand has been repudiated, all of those people who started buying in the summer of 2008 in the Northern Virginia market should be feeling good about their purchases now.
It may be bad in Florida, although I hear many areas of Florida are seeing some signs of improvement, but it is anything but bad up here in Northern Virginia. Under $400,000 buyers are bidding against each other to get the house they want. To paraphrase Tip O’Neill, “All real estate, like politics, is local.” Go get yours today!
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