Are You Ready For A Double Dip?

There are many positive signs in the media that point to a steady recovery in the housing industry. A Union Tribune article showed San Diego home prices were up 12.4% for the month of May and went on to show that the City of San Diego stood in 2nd place when it comes to the highest increase among 20 metro areas surveyed. Furthermore the first time home buyer affordability index continues to remain strong as interest rates linger at historic levels.

Supply and demand is the name of the game when it comes to real estate and home values.

·         1-4 month’s inventory is a sellers’ market where appreciation usually occurs.

·         5-6 months is a normal market with prices staying just ahead of inflation.

·         7+ months creates a buyers’ market where depreciation usually occurs.

As we take a look at the month of May there was an 8.3 months’ supply of existing homes on the market.
Looks like a buyers’ market to me. But you don’t have to take my word for it.
MacroMarkets conducted a survey of top economists, real estate experts and their views on Home Prices for the next 5 years. The experts are predicting that cumulative appreciation will not reach positive numbers until the end of 2012 and will still be under 10% by 2014.

In addition according to a report from RealtyTrack showed that as the pace of properties that were entering the foreclosure process was slowing, the speed at which the banks are repossessing properties has increased, since lenders have cleared out their backlog of inventory delayed by the foreclosure prevention efforts of 2009.

Instead of filling notices of default, banks are focusing on the properties they currently have on the books and aren’t wasting any time streamlining the foreclosure process when started. So how many properties are we talking about? RealtyTrack estimates include 3 million foreclosure fillings for the year with 1 Million REOs.
That’s 1 Million properties on the market on top of short sales and traditional listings.
So the question is, where do you see values going?