I have been telling you that I think our real estate market—where it is today—is at the bottom of the present cycle. That readers who want to sell can now assume prices will firm up about where they are today, and buyers should get used to these “new” prices, 'cause they're not likely to go any lower. In fact a significant majority of economists and experts believe that the bottom for home prices arrived in the first quarter (or just to cover their butts will agree that the “bottom” will have arrived sometime before year-end.)
Despite persistent macroeconomic uncertainty and unprecedented housing market dysfunction, almost two-thirds of the panelists of the Macro Markets Economic Roundtable see the residential real estate market at an historic turning point.
So, would that mean there is a recovery on the immediate horizon? Well, maybe not. Just because we're about to signal the end is near, doesn't mean the recovery will immediately follow. The group of 69 panelists who are currently forecasting the 2011 turning point only predict about a two percent average annual growth in home prices over the next 3-4 years.
One thing all agree on is that young families and adults ages 31 to 45—are likely to lead the home-buying recovery as it gets underway. These potential home buyers are most likely to think it’s a good time to get off the fence—and have strong opinions about the design features their new homes will include.
In sharp contrast, Baby Boomers continue to wait for the market to improve, and their decisions to delay retirement also delay their decisions to purchase and/or downsize into a smaller home.
In a recent survey of 10,000 buyers and potential buyers across the country, almost 90% were optimistic about a new home purchase saying that in their opinion, now was a good time to buy a home. In addition, even though the average home size is shrinking, a majority of these prospective buyers said they would like a bigger home than the one they have. This is especially true among first-time buyers or younger families looking for more room to grow.
This group is willing to pay more money for a green home, and they expect new homes to already have many green technology features. They also favor dark wood cabinets, a separate tub and shower and a fireplace in the living room, and more preferred a great room over formal spaces.
And while community amenities are important to Gen X buyers, nearly half said they prefer a home in a large-lot, suburban development, versus about one fifth looking for a traditional or “walkable” neighborhood. And they are looking for homes with a connection between indoor and outdoor spaces, to create the perception of greater home size, even if the space is not under A/C. They also want more storage space, an open floor plan and more flexibility in the garage.
All this is good news, and my own feeling is that we're all so tired of the market being depressed, we're ready for a turn.
My opinion: I'm not saying the market has turned, because in spite of the trickery, smoke and mirrors presently at work in Washington—including the QE2 cheaper dollars which will make house prices go up, together with restated numbers as needed--there may still be a significant wait before we will see any of the growth we had only a few years back, nonetheless, some growth (even in cheaper dollars) is certainly a welcome change for all Americans.
BTW, if you read last week's column you may recall that last week I had clients who made 4 offers, well two of those 4 offers were accepted, so has the spell been broken? Stay tuned.
Dane Hahn is a real estate professional in New Hampshire at The Gove Group in Stratham and in Florida at Tarpon Coast Realty in Boca Grande, Englewood and Sarasota. He will answer your questions sent to firstname.lastname@example.org