A Bell Won't Ring

I heard a quote recently which said, "when home prices hit bottom you won't hear a bell ring." Bottoming out is something that is more clearly identified six to eight months after the event has occurred. Depending on the market it can even take a little longer. However, I have been seeing some positive signals lately and there are some early indicators that we might be getting pretty close to bottom.

Here is what I am seeing:
  1. February home resale figures jumped by 5.1%

  2. February new home sales also jumped 4.7%

  3. Interest rates are officially at historic lows

These are national reports and it is important to note that our regional market performs better. These reports may be early indicators that housing is beginning to move in a better direction

Our area is not completely recession proof, but we have felt much less of an impact because of the economic strength of our region. Here is my experience locally:

  1. I noticed an increase in buying activity early December 2008 - primarily first-time buyers but some move-up buyers as well.

  2. January 2009 started strong and continues busy - mainly first-time buyers and some move-ups.

  3. Whenever a home comes on the market and is priced right, it will often produce multiple offers.

  4. I am noticing a return of confidence as buyers take advantage of low prices and historic low interest rates.

  5. As interest rates dip buyers move off the fence and when they do, they move decisively to purchase well-priced homes.
As I speak with other real estate professionals I'm receiving confirmation that they are having a similar experience. Whenever the market is making a change, real estate agents who are on the front lines every day usually see that change first. I am seeing some positive signals right now.

Have you come across any positive signals?

Could Be a Good Idea

President Obama has launched a very aggressive stimulus program and the details are just starting to filter down. I won’t pretend to know everything about the bill and if or when it will actually do what it is intended to. There is a parade of talking heads on TV every night better qualified than I to answer that question – unfortunately they never agree on anything. There is some agreement on one point however – by the time the economy recovers nobody will know for sure what exactly caused the recovery and when. It will likely be a combination of factors starting with the stimulus program that was just launched, a natural swinging back of the economic pendulum, or maybe just the fact that your washing machine gives up the ghost and it's time to buy a new one whether you want to or not. At some point we will venture out and begin to spend again. The world has to spend to live.

During this time of uncertainty some novel ideas pop up about how best to deal with certain aspects of the problem. I came across one the other day that made some sense to me. This is an article that appeared in the Washington Post February 22, 2009 written by Ricardo J Caballero, head of the Economics Department at MIT.


Perhaps this idea may gain some traction and be one of the factors that puts our economy back on solid ground. What do you think?