Real Estate Marketing & Beyond
According to the latest housing data for the second quarter of 2011, from the National Association of Realtors, housing prices on average continue to edge lower in almost 3/4 of the markets surveyed.
Housing prospects unlikely to improve any time soon. Image courtesy of Pagedooley
While 27% of markets showed a very small increase in average selling prices, overall the data still indicates that housing will continue to struggle because of high unemployment and tight credit.
Considering that interest rates remain at or near all time lows, the lack of any significant improvement in this data points to a confluence of other factors that continue to dog the housing market.
High unemployment continues to be a major issue, as it leads directly to fewer qualified home buyers. In past recessions, activity in the housing sector tended to add jobs to the economy. But not this time. The cycle of the housing bust leading to higher unemployment has turned into one in which higher unemployment is continuing to drag down the housing market.
Unemployment continues to dog housing markets. Image courtesy of Combined Media
All-cash purchases of distressed properties are now about 30% of all home sales, up from 25% in the 2nd quarter of 2010. First time buyer purchases are down 11% from the same period in 2010. For the first time in the modern history of the housing market, investor buyers may actually begin to out number first time buyers. If this trend were to continue, it would carry major implications for the residential investment property market, and could actually lead to lower rent rates, which could continue to encourage renting, keeping more first time buyers out of the housing market.
Traditionally first time buyers have accounted for the bulk of home purchases, but this segment of the market is more likely to be affected by the unemployment problem. If certain changes in mortgage financing, such as the Qualified Residential Mortgage Rule take effect, and new mortgages are mandated to require 20% down payments, the first time buyer market could be drastically reduced.
I'd like to wrap this article up with a nice positive statement about a housing recovery, but between unemployment and pending government regulations on mortgages, the outlook for housing continues to be negative. One thing is for sure, if housing is to recover any time soon, we're going to have to see a drastic improvement in the employment situation.
