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March 10th, 2009 8:04 AM by David W. Welch
The official results should come out today. They seem to have been running a bit late the last couple of months, but check back here this afternoon. If they are available, I will have them for you. The two big things you will see are a big increase in the number of sales and pending contracts, and a slight decline in both inventory and median price.
Consider this if you are still waiting to purchase a home. Interest rates are down around 5%. Between the lower interest rates and prices now below pre-boom levels, housing affordability is extremely high. The government just established a $75 billion program to keep people in their homes, that should mean fewer distressed properties coming on the market. It may evern mean that some will take their homes off the market that are currently trying to short sale. The distressed properties make up the majority of the homes going under contract and the majority of closed sales. If fewer of these properties come to market and the ones on the market are selling faster, they will run out. I have already seen them plateau here in Orlando, and in fact the inventory has declined very slightly from around 9,600 to around 9,400.
Yesterday, Warren Buffet said the economy "fell off a cliff" which got the big headline. One of the other things he said in that interview was that inflation is almost certain to work it's way back into the picture. In other words, the low interest rates may not stick around very long. I believe that we will see rates starting to creep up by summer, and we could be back to rates closer to 6% by the end of the year. This could especially be true if home sales continue to rise. We are already on a six month streak here in Orlando of year over year increases. February was nearly 30% higher than last year. Keep another thing in mind. Builders are not building, and prices will have to come up before they will start building to be profitable. I think we are getting close to a tipping point.
David Welch, Real Estate Optimist