In the News
Presented by Prairie
Title May 14, 2014
Commentary
by Frank Pellegrini, Prairie
Title CEO
We’re
coming up on six years of a lackluster, if not at times downright dismal, real
estate market. Consider this statistic: seasonally adjusted housing starts were at 2.19 million
in February 2006, and still as high as 1.33 million in August 2007 just before
the bottom dropped out of the economy. In March of this year the rate for
housing starts was 946,000, a bit better than the previous months but still
well below the types of numbers we’d like to see.
The
economy in general certainly is better than 2009-11. We’ve been adding jobs and
the unemployment rate has been ticking down, but still the residential real
estate market is in the doldrums. What’s holding us back? Consider these
frustrating headlines (when read side by side) from the Wall Street Journal:
Job Growth Gathers Strength (May 2)…….Demand for Home Loans Plunges (April 24)
In
my view, three national trends have combined to prevent the emergence of the
robust real estate market we’ve all been waiting for:
1. Interest rates have
ticked lower lately but are still higher than a year ago and are likely to
increase as we move through 2014.
2. The national supply of
distressed homes has dropped (CoreLogic reports a 10 percent drop in completed
foreclosures
from March 2013 to March 2014), so fewer
bargains are available to prospective buyers.
Until we see improvement on several of these
fronts I’m afraid we’re stuck in a negative cycle. It’s anybody’s guess as to
when the market will get better. I suspect that when conditions improve residential
real estate will take off quickly and dramatically.
Until that time comes, we’ll just have to keep
believing that the turnaround is imminent.
Questions or comments? Call me at 708-386-7900, or
send me an email: frank@prairietitle.com.
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