The National Association of Realtors (NAR) forecast for the 2013 housing market was an object of contention at the recent National Association of Real Estate Editors (NAREE) conference.
NAR predicted positive changes for the national housing market in 2013, including:
- 10% home price appreciation; and
- 70-80% growth in housing starts.
Under interrogation from NAREE participants, NAR later revised its home price appreciation estimate downwards to a 3-5% increase in home prices between 2012 and 2013.
Both the National Association of Home Builders (NAHB) and Zillow considered NAR’s predictions too optimistic and offered more conservative forecasts for the real estate market.
Zillow acknowledged home sales rates and prices vary significantly depending on the geographical location of the market. For 2013, Zillow predicted only a 0.9% increase in Los Angeles home sales and price.
first tuesday take
This isn’t the first time (or the last) NAR will attempt to force its rose-colored vision on the masses. It may be nice to bathe in the warm fantasy of an 80% increase in housing starts, but few others are able to suspend disbelief with quite the same skill and tenacity outside of a theater.
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Yes, the housing market will eventually recover; sales and prices will increase. However, this will not occur at nearly the rate at which many in the real estate industry, including NAR, have predicted.
California’s real estate market remains, and will continue, on its bumpy plateau of recovery — a couple of quarters up, then a couple down, and so on. This means that every few months volume rises a little, then falls again, creating a zig-zagging vital status and spastic enthusiasm.
This pattern will continue for a few years yet, into 2016, and possibly beyond. Prices cannot move until sales volume is on a stable incline for nearly 12 months. We would love to say that is next year, but the data will not allow it.
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The current upward bump in home sales volume (and the rare concurrent price rise) is due solely to speculators (flippers) and buy-to-hold investors jumping in simultaneously and creating ever more momentum. Alone, they purchased 33% of homes sold at trustee’s sales in the first quarter of 2012 and bought for cash 28% of all resale homes.
If this evidence is ignored, today’s sales volume upturn (like that of the 2010 market driven by federal purchase-assist subsidies) appears to be a recovery — except it’s not. Current sales volume isn’t driven by a sufficient, much less sustainable, demand in end users, i.e., owner-occupants. California just hasn’t reached anywhere near the level of employment growth or consumer confidence required to lure those marquee buyers out of the woodwork.
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Defaults and foreclosure in a steady decline, for now
It’s the demand, stupid!
Everybody loves good news, but not at the sacrifice of the facts. If NAR’s thumbs are only capable of pointing one direction, let them celebrate:
- the permanent decline in the use of adjustable rate mortgages (ARMs); or
- the first-ever consumer protection regulation agency for the nation’s borrowers; or
- the renaissance of real estate fundamentals, this time imposed with oversight.
But until California’s economy gains strength, with job growth of at least 400,000 annually for 24 months, and more homes are again purchased by end users (a.k.a. owner-occupants), cheering a speculator-driven rejuvenation of the housing market is ignoring data at your peril and at best very, very premature.
Editor’s note — first tuesday has been a member of NAREE since 2009.
Re: “Housing experts offer ideas on the new normal in wake of downturn” from The Sacramento Bee
NAR is a notorious liberal organization, nothing new about them, or any other liberal, lying about growth in California, (and I’m not a Republican, and I was born and raised in Cali).
I predicted the fall in November of 2007 and advised all my clients accordingly. We ultimately made it thorugh 2008 relatively untouched. 2009 saw some struggles, but nothing catastrophic. But California will not survive the liberals folks. West LA saw a massive exodus out of rentals in 2008/9, and they have not returned or been replaced. My painting vendor has had customers in the area for 3 generations and I hear all about it.
California will implode financially within 5-8 years, but the liberals will still be intrenched for awhile after that. My wife and I have decided to give the business to our daughter, and we are leaving in 2018.
Common liberal ignorant response by Pamela, if you have anything negative to say about Obama’s administration you are a bigot and a racist. The liberals have become so narrow minded and intolerant, they remind me of the conservatives in the 60’s with the ‘Love it or Leave it’ slogans.
Democrats and Republicans have become no different that the Sunnis and Shites, they hate each other, and would love it if they could force each other completely out of the US.
If Pamela didn’t have blinders on, and she did a little homework, she could check which political parties were in charge for all the cities and counties that have filed bankruptcy since 2008…..almost exclusively Democratic, Liberal, pro union, pro welfare.
Why are people blaming Obama? The fall happened before he took office. So if you lost everything you had, would it only take you 3 years to get it all back? Come on people use your brain. And stop the bigotry.
So many homeowner rescue plans have been instituted in the past several years and yet none has really worked on the broad scale expected.
Why is that? Could it be that each and every one was predetermined to fail? Could it be that each was offered only to assuage the public fear and anger against the system as millions began losing their homes and never really meant to solve the problem?
Could it be that at intervals in the economic history of a nation, the economy is purposely allowed to become depressed sufficiently to ruin the common man while the elite then “cherry pick” over the carcasses at pennies on the dollar, after which they can resell the properties in vast numbers or rent them to the very victims they caused to become so diminished in the first place, as they then revive the economy at a later time?
If this sounds like a preposterous supposition, then study history. You might be shocked to learn that the same technique has been used time and again to transfer massive amounts of wealth and property from the common man to the privileged elite.
And, at the center of such actions has always been one sinister group—the bankers.
The housing market will not improve until business-unfriendly Obama is out of office.
So I predict improvement either in 2013 or 2017 It’s up to you!