NAR Looks at the bright side of slowdown

from Real Estate Broker's Insider

In this difficult market, the National Association of Realtors is accentuating the positive. NAR Chief Economist Lawrence Yun points out that the 5.7 million home sales projected for 2007 will make it the fifth-best year ever.

A naysayer could counter that 5.7 million sales isn’t much help for an industry that had geared itself up to handle 2005’s 7.1 million sales.

“The extended real estates boom from 2001 to 2005 created unrealistic expectations that housing is a short-term, high yield investment,” Yun says.

While the National Association of Realtors is accenting the positive, Zillow.com, the S&P/Case-Shiller index and the Office of Federal Housing Enterprise Oversight take a more pessimistic view.

Zillow says national home prices fell 5.7 percent from the third quarter of 2006 to the third quarter of 2007.

What’s worse, Zillow says 15.6 percent of homeowners nationwide who bought in the past year and 17.5 percent of those who bought two years ago have current home values that are less than the original mortgage amount.

Of those who bought five years ago, only 1.8 percent are upside down.
Meanwhile, chief executives of two publicly traded retailers recently blamed the housing slowdown for their falling third-quarter profits.

Earnings at Lowe’s fell 10 percent from a year earlier. The story is similar at Office Depot. Its profits fell 9 percent.

Jonah’s Thoughts: The 5.7 million sales will be adjusted down. It is better to tell the customer they have a nasty cold rather than wait and suffer the flu epidemic. Sell it now and suffer a little is better than holding on to your emotional price and taking a real nasty hit a year from now.