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HOORAY! WE'VE FINALLY HIT BOTTOM! - Rich Levin - January 31, 2008

The following is based on my recent interaction with Agents across the country in a wide variety of markets. I realize that it contradicts the doom and gloom news that you will continue to read and hear in many places. Where media is concerned good news does not travel fast. The information and recommendations below provide you with the opportunity to lead and take advantage of the very positive signs that are likely to be more and more apparent to you in your market.

Your positive attitude, your confidence and your enthusiasm based on the truth attracts business.

Your choice to lead instead of follow can bring you tremendous success.

We've finally hit bottom.

"Hooray, we've hit bottom." Perhaps a more appropriate response is, "Phew, we've finally hit bottom."
The first weeks in January have seen unusually warm temperatures in parts of the Northeast. In addition to record temperatures for January in the Northeast, in many markets across the country
Real Estate Agents are seeing record numbers of buyers responding to marketing, showing up at opens and making offers.

As predicted (by me in my article Sensationalism and the Housing Bubble last year and by smart economists) prices in a growing number of markets are bottoming out.

Some markets have experienced little or no drop in prices over the past two years. They are the first to experience renewed activity and value appreciation.

Many, perhaps most markets across the country experienced a mild decline in prices. These markets have some exciting activity as buyers who were waiting for prices to hit bottom are realizing that they now have that price advantage they were waiting for.

In the hardest hit markets that experienced the greatest price declines, there is mixed news. On one hand it may take another twelve months for enough of the excess inventory to be absorbed for those markets to experience growing appreciation. On the other hand a rapidly growing number of buyers are coming back into the market anticipating that the bottom may have arrived. These buyers are getting great values while they are absorbing the inventory. These buyers are actually creating the future value increases that they perceive.

Let's be realistic.

Let's be realistic. Things don't turn completely around in one year. We are not going to immediately see the kind of demand and seller's market that create double-digit appreciation this year. We will see the end of price depreciation and mild growing appreciation in market after market.

Hmmm... what will the media have to talk about? Oh, they still have the banking industries woes recovering from the subprime crises, and of course there is an election. Hey, if one of the presidential candidates is really smart, they'll talk about how they will solve the problems of the housing industry so that they can take credit for the inevitable turnaround that is already occurring.
As one market after another recovers there will be increasing appreciation. In your market some time between 2009 and 2011 you will see another seller's market. In the hotter markets you will again see double-digit appreciation.

That REALTOR® friendly seller's market will last seven to ten years followed by another correction. The cycle continues; seven to ten years or more years of a healthy seller's market followed by one to three years of a softer buyer's market.

A little perspective.

A little perspective is in order here. Real Estate values, particularly single family housing in the USA has increased in value consistently for over a century ever since it has been measured and recorded.

The only factor that interrupts this positive momentum is when major employers abruptly leave a particular area creating a rapid increase in inventory and a long-term decrease in demand. Unfortunately, this happens in some markets.

Notice that I said abruptly leave an area. Many cities have suffered from a slow decline in employment and population. These slower shifting markets are often able to maintain a level of economic health as spin off businesses and new employers have time to replace the departing ones.