CNN Money is one of the few news sources that offers optimism. Not always, but often enough to keep some hope alive.
Quoting a study from the Joint Center for Housing Studies at Harvard, they discussed the effect of population growth on the future of real estate and housing demand. Nicloas Retsunas, the center's director, says: "As long as you have more households, more people are going to need places to live."
Even a simple real estate kind-of-guy like me can see the sense in this logic, specially when they predict an annual increase in demand of 1.4 million households from 2010-2020.
Readers of our blog know we are generally optimistic. Realists too. We know the current market is only part of a cycle, albeit an ugly one. That which went up will come down and visa versa. It's all Newton's fault for prescribing his laws of motion.
We are still concerned by the number of foreclosures hitting the market... a number that has spiked upward this month. These homes will continue to cause a reduction in home prices resulting in reduced home equity positions for existing homeowners. However, there is a good side to this as well. Reduced home prices allow new people the opportunity to buy.
Out-of-state and first time buyers, who were forced out of our market by high prices, can now find homes to buy. Over time the prices will stabilize. Those who bought homes before 2004 and did not take all their equity out should be fine. Others, who saw their home as a cash cow and personal ATM machine will simply have to wait. Luckily, there are many more people who either own their homes outright or have loads of equity than those who don't.
Gene Urban
The Urban Team
www.UrbanTeamAZ.com
