Market Update
July 5th, 2007 Categories: Dublin Real Estate, Livermore Real Estate, Market Update, Pleasanton Real Estate
Weekly Commentary
Thumbnail Sketch: Consensus forecasts are being adjusted downward—meaning that reliable, conservative economists are now expecting the real estate market correction to last longer than they thought at the beginning of this year. Specifically, these experts do not expect the market to fully bottom until the very end 2008 at the earliest, and they expect bigger home value reductions along the way.
They do not, however, expect the lengthier correction to weigh down the overall economy very much, even though the real estate market’s woes are caused largely by the unraveling of untenable subprime mortgages.
Aaron Smith and Ryan Sweet, of Moody’s Economy.com, write the following in their July 3 article, “Housing Bottom Watch”:
“May housing data generally conformed to expectations. The housing correction, which looked poised to bottom earlier this year, is back on a downward course, thanks to the turmoil in the subprime market. The correction is now expected to run another year, with sales and construction bottoming sometime very late this year. The impact of the housing slowdown on the labor market will hit full-force this summer, as job losses hit construction in greater numbers. House prices will decline on a year-ago basis through next spring, depressed by the still-high level of inventories. The peak-to-trough decline in house prices is now expected to be near 10%.”
This is difficult stuff. They add, though—“Despite the dark outlook, the housing correction will not cripple the broader economy. It will, however, limit an acceleration in growth in the second half of the year. It also leaves the Fed more likely to drop its inflation bias and take an explicit neutral stance than to signal tighter money over the 2007-08 forecast horizon.”
This doesn’t mean it’s time to hide under a rock, though. People still need to buy and sell houses. Lives change. Opportunities arise. It will just be more difficult for the number of professionals who thrived during the now-fading real estate boom to make as good a living as they did not long ago. But a more difficult time to make a living creates even richer rewards for a newly-strengthened marketing program. Now is the time to increase your market share, whatever your field. That is where opportunity lies.
We will continue to watch this evolving market closely, and to report what we see in this weekly update.
