Is the housing market’s glass half empty or half full?
By Melissa Wirkus
Is the housing
market recovering, or slowly dying a harsh death?
It’s the classic glass half empty/half full scenario.
The answer to these questions is that no one knows for
sure. Regardless of research or credentials, no one
will know the future of our market until it actually
occurs.
It seems as though everyone is an expert on the housing
market these days, and if not an expert, then they at
least have an opinion about our current state of affairs.
There is a lot of debate on whether things are getting
better or worse for the housing market. But amidst all
of the bad news out there, recent numbers have been
coming in showing that things could be looking up for
housing in the near future.
An October 23, 2006 article by Marc Hogan of Business
Week, “Is housing out of the woods?” discusses
how some experts are saying that the worst may be over
for the housing market, but recovery may not be as easy
as expected.
“Depending on whom you ask, the winds may already
be shifting for the housing market. All year, economists
have warned of a bursting housing bubble and its potential
impact on economic growth. However, a recent stream
of encouraging data has some prominent prognosticators
changing their tune.”
One of the main reasons why people are beginning to
be more optimistic about the housing market is because
the ex-chairman of the Federal Reserve is touting good
news. And when the Fed says things are good, that makes
the public and professionals alike think things are
good as well.
“One of the first in line was Alan Greenspan.
As recently as May 18, the former Federal Reserve chairman
put an exclamation point on the housing slowdown when
he declared, ‘The boom is over.’ But now,
the ‘worst may well be over,’ Greenspan
was quoted as saying Oct. 7, after mortgage applications
posted their biggest weekly gain since June, 2005.”
“A growing number of economists and analysts have
come around to the ex-Fed chief's view. Some investors
may see sunnier skies too, as homebuilding stocks such
as Lennar, DR Horton, and Pulte Homes
have rebounded since touching 52-week lows in July.”
It seems as though there really is no doom and gloom
scenario, but rather things are just leveling out. Home
prices are probably going to fall further, construction
is going to stall and there are going to be a surplus
of homes on the market
– Bottom line.
“‘The point of maximum deterioration in
housing activity has probably passed,’ says Jan
Hatzius, chief U.S. economist at Goldman Sachs, in an
Oct. 20 report. ‘The sharp downturn of the past
year seems to have brought total housing starts—single-family
starts, multi-family starts, and mobile-home shipments—close
to the level justified by the underlying demographics.’”
Others say that the increase in housing starts for September
is just a small piece on the big picture, and we should
expect some further declines in the near future.
“Others maintain that the housing downturn still
has a long way to go. ‘Commentary suggesting housing
demand is recovering, based on the latest homebuilder
and mortgage applications readings, appears to be more
wishful thinking than fact,’ says Keith Hembre,
chief economist at First American
Funds, in an Oct. 20 report.”
So it seems as though once again the experts are split,
and everyone has their own opinions. We can only wait
and see for next month’s figures to see who will
come out on top of “The Great Housing Market Debate.”
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