Sonoma County Mortgage & Housing
May 20th, 2010 categories: Buyer Resource, Mortgage Rates
Market Dynamics and Consumer Opportunities
As a lender I read various market reports. These reports break the real estate market into various segments and basically come down to units of homes sold over a given time period. These segments include “new” versus “existing” homes sold, basically the number of homes sold by home builders versus the number of homes sold by their current owner. Across the nation “new” versus “old” is broken down into regional data and then into state data.
The aggregate national housing data can be broken into ever discrete data points. In addition to new and old units sold, it is possible to break out the number of single family homes sold versus the number of condos, or the number of rental units built versus the number of for sale homes built, this can go on and on. This data is always compared to past results. This month’s data is compared to last month’s data. This year’s data is compared to last year’s data.
What just struck me were a few recent reports that have looked at today’s housing performance and compared it to the number of homes sold during “the housing boom.” This period between 2003 and the middle of 2006 has been called “the go-go years” and “housing’s heyday” in addition to “the housing boom,” which begs the following question to be asked.
If we continue to breakdown the housing data into ever more discrete units until we finally get to the transaction level, would any of the consumers who bought their home during “the boom years” say the got a good deal on their homes?
“The Boom Years” is characterized by the aggregation of transactions. Most of those who handled multiple transactions did very well. At the top of the heap would be homebuilders, then Realtors and mortgage lenders. The experience of the individual buyer is not accurately reflected in a descriptive title for any given market.
This divergence between a descriptive title being applied to market conditions and the experience of the individual applies to today’s housing market. The housing market is generally described as depressed, moribund, or even as a crisis. These are apt descriptions if you happen to be a homebuilder, a supplier of building products, or a land broker. However; for consumers it is possible to say that today’s housing market represents a remarkable opportunity.
Home prices are starting to stabilized after falling as much as 50% over the last few years. If you combine these low home prices with interest rates that are very close to historic lows, the cost of home ownership is lower today than in any time in recent memory.
One of the causalities of “the boom years” was the concept of what our homes should be. Throughout much of this decade our homes became financial instruments that we manipulated for short term financial gain. If you are looking for a house to be a place that can be the long term anchor for a family, to be that old school idea of a home, then today represents a remarkable opportunity to get a good deal. Those who end up buying their home in the next two years will mostly likely look back at that purchase in several years and very happy with the results.
If you have any questions on this entry, or have any questions regarding mortgages, please feel free to contact me.
This article was contributed by: Bob Jones
Mission Hills Mortgage Bankers
(707) 292-0337
rtjones@mhmb.com
Interesting article thanks for posting it, not sure i agree with everything in it but it made for good reading so keep up the good work!