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HTML <html> <head> <title>The Worst May be Over?</title> </head> <body> <h1>The Worst May be Over?</h1> <div class="info">Author: <a href="author_1_77974.html">Julie Jalone</a></div><div class="body">My husband and I are customers and big fans of USAA the member owned financial services company that serves military personnel and their families. Occasionally they post some very good articles on their website. Today I read, “The Housing Bust: Is the Worst Over?” which is an interview with Joe Kalish, a Strategist at Ned Davis Research.<br /> In the article, USAA pointed out home sales in the US declined by 9.8 percent last year with national price gains dropping to 1.1 percent. In addition they confirmed what I have been saying that current data is mixed. <br /> <br /> Mr. Kalish points out, “There are two parts to every housing downturn: magnitude and duration.” He compares the current down turn with some of those in the past and although there are places like the Sacramento area that have been hit hard, compared to other downturns, “...it’s really not been that bad, although it has felt bad to many people.”<br /> <br /> One of the key ideas expressed in the interview is that Joe Kalish believes that the national real estate market has bottomed out and is starting to recover. Some of the indicators he watches to prove his point include the home builder’s stock index which was at its low point last July. He is also following mortgage interest rates. “Anything under 6% on a 30-year fixed would be a very favorable sign, while rates above 6.5% and approaching 7% would be a negative. <br /> <br /> Finally he watches the Mortgage Bankers Association’s Purchase Index and of course inventories. He says inventories are a lagging indicator and “...actually tend to rise after a market top as homes and condos started during the boom are completed. There was a 6.7-month supply of homes on the market in February, below last year's peak of 7.2. If we get below 5 months' supply, that would be a positive sign; anything approaching 7.2 months would be a negative sign.”<br /> <br /> Kalish is bullish about a recovery in the national real estate market and when asked why we are not seeing clear signs of a recovery had this to say, “When the housing market gets out of whack, it generally takes some time to restore the balance between supply and demand. This is an entirely normal process, and during periods of market rebalancing it very often doesn't feel like a recovery is occurring.”<br /> <br /> He does not appear to be overly concerned with the current supply of housing and points out, there are a lot of homes on the market with no one living in them and cash-strapped investors will likely exert downward pressure on home prices this year in area where inventory remains high. He goes on to say, “The good news is that speculative building has effectively dried up, leaving us with pure primary demand. This is an essential step in restoring balance. In this country we need nearly 1.5 million new units a year just to meet increases in household formations.”<br /> <br /> One of the factors I have been talking about recently is the changes in the mortgage industry including the sub-prime market and an overall tightening of credit requirements which is clearly reducing the number of buyers. Kalish confirms my worries but takes it a step further, “While things will get worse in terms of delinquency and foreclosure rates on sub-prime and traditional adjustable rate mortgages, investors will come in at some point and buy up these loans. It's really just a question of how much of a discount is required. Still, the tighter loan standards should reduce demand at the margin.” <br /> <br /> The conclusion of the USAA article is the worst is over in the current housing slump, it will take time to recover but as income goes up, mortgage interest rates fall and prices remain flat, affordability is improving. Kalish states, “The worst speculative excesses are being wrung out, and fewer new homes are coming on to the market. It's going to take some time, and there is always the possibility that there could be another leg down.”<br /> To read the full article on the USAA website, follow this link: “The Housing Bust: Is the Worst Over?” <br /> </div> <div class="source">Article Source: <a href="http://www.articlealley.com/article_210000_33.html">http://www.articlealley.com/article_210000_33.html</a></div> <div class="author"> <div class="authorOccupation"><strong>Occupation:</strong> Professional Realtor</div> <div class="authorBio">Julie Jalone is a professional experienced Realtor serving the needs of buyers and sellers of residential real estate in the Sacramento area. Her company, MagnumOne Realty is known for providing high quality customized individual service making the process of buying or selling a home easier for you. To learn more about Julie and her business, visit her website at jalone.com where you will find real estate news, analysis, Free home search, resources, links and her daily blog, ”Keep it Real in Sacramento.”</div> <div class="authorUrl"><a href="http://www.jalone.com" target="_blank">http://www.jalone.com</a></div></author> </body> </html>
Text The Worst May be Over? Author: Julie Jalone My husband and I are customers and big fans of USAA the member owned financial services company that serves military personnel and their families. Occasionally they post some very good articles on their website. Today I read, “The Housing Bust: Is the Worst Over?” which is an interview with Joe Kalish, a Strategist at Ned Davis Research. In the article, USAA pointed out home sales in the US declined by 9.8 percent last year with national price gains dropping to 1.1 percent. In addition they confirmed what I have been saying that current data is mixed. Mr. Kalish points out, “There are two parts to every housing downturn: magnitude and duration.” He compares the current down turn with some of those in the past and although there are places like the Sacramento area that have been hit hard, compared to other downturns, “...it’s really not been that bad, although it has felt bad to many people.” One of the key ideas expressed in the interview is that Joe Kalish believes that the national real estate market has bottomed out and is starting to recover. Some of the indicators he watches to prove his point include the home builder’s stock index which was at its low point last July. He is also following mortgage interest rates. “Anything under 6% on a 30-year fixed would be a very favorable sign, while rates above 6.5% and approaching 7% would be a negative. Finally he watches the Mortgage Bankers Association’s Purchase Index and of course inventories. He says inventories are a lagging indicator and “...actually tend to rise after a market top as homes and condos started during the boom are completed. There was a 6.7-month supply of homes on the market in February, below last year's peak of 7.2. If we get below 5 months' supply, that would be a positive sign; anything approaching 7.2 months would be a negative sign.” Kalish is bullish about a recovery in the national real estate market and when asked why we are not seeing clear signs of a recovery had this to say, “When the housing market gets out of whack, it generally takes some time to restore the balance between supply and demand. This is an entirely normal process, and during periods of market rebalancing it very often doesn't feel like a recovery is occurring.” He does not appear to be overly concerned with the current supply of housing and points out, there are a lot of homes on the market with no one living in them and cash-strapped investors will likely exert downward pressure on home prices this year in area where inventory remains high. He goes on to say, “The good news is that speculative building has effectively dried up, leaving us with pure primary demand. This is an essential step in restoring balance. In this country we need nearly 1.5 million new units a year just to meet increases in household formations.” One of the factors I have been talking about recently is the changes in the mortgage industry including the sub-prime market and an overall tightening of credit requirements which is clearly reducing the number of buyers. Kalish confirms my worries but takes it a step further, “While things will get worse in terms of delinquency and foreclosure rates on sub-prime and traditional adjustable rate mortgages, investors will come in at some point and buy up these loans. It's really just a question of how much of a discount is required. Still, the tighter loan standards should reduce demand at the margin.” The conclusion of the USAA article is the worst is over in the current housing slump, it will take time to recover but as income goes up, mortgage interest rates fall and prices remain flat, affordability is improving. Kalish states, “The worst speculative excesses are being wrung out, and fewer new homes are coming on to the market. It's going to take some time, and there is always the possibility that there could be another leg down.” To read the full article on the USAA website, follow this link: “The Housing Bust: Is the Worst Over?” Article Source: http://www.articlealley.com/article_210000_33.html About the Author: Julie Jalone is a professional experienced Realtor serving the needs of buyers and sellers of residential real estate in the Sacramento area. Her company, MagnumOne Realty is known for providing high quality customized individual service making the process of buying or selling a home easier for you. To learn more about Julie and her business, visit her website at jalone.com where you will find real estate news, analysis, Free home search, resources, links and her daily blog, ”Keep it Real in Sacramento.” http://www.jalone.com
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