Real Estate Journal Online

Although sales volume is up in the real estate market, profits are still down in the retail arena. Zillow reported that 37 percent of all homes sold in March 2011 were sold for less than the sellers paid for them[1]. And prices did not just fall compared to when the homes were purchased; Median home prices were down nationally 8.2 percent from the year prior. While these low prices are spurring the volume and pace of sales in many areas of the country, homeowners are having a hard time considering the situation a harbinger of a housing recovery when they are losing money on their investments. Furthermore, the new drops in value have experts reconsidering when the housing market will actually hit bottom and pushing their estimates back into 2012 or 2013[2]. Last year, many economists believed that the bottom would come in late 2011.

Analysts blame federal housing credits, in part, for the delay in the recovery. They spurred a temporary boost in home values and home sales, but when the credits expired, so did the fleeting recovery. Zillow’s chief economist Stan Humphries admitted that most “expected December and January [of 2010] to be bad,” but added that the declines in February and March of this year were “really staggering” and “indicate a reflection of the true underlying demand…and it’s being completely overwhelmed by supply.” He now expects prices to fall another 7 to 9 percent before the market hits bottom.

Many real estate investors believe that the market cannot truly recover until prices go much, much lower and spur action on the part of investors. Do you think that tanking home values are essential to market recovery?

Thank you for reading REJournalOnline!

Let us know how low prices will have to go before you get involved in today’s market.

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[1] http://seattletimes.nwsource.com/html/businesstechnology/2014994980_zillow09.html

[2] http://online.wsj.com/article/SB10001424052748704810504576309532810406782.html