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Real Estate Experts Predict Worst is Over — What About the Clovis Real Estate Market?
August 28th, 2009
Real Estate Experts Predict Worst is Over — What About the Clovis Real Estate Market?
Leading real estate experts predict the worst may be over for the U.S. real estate market. Find out why they think so and whether their rationale applies to the Clovis real estate market.
Real Estate Market Stabilizing Nationally
According to a leading economic gauge of the real estate market, the S&P/Case-Shiller home-price index, home prices only dropped 15.4% in June from a year earlier. This may not sound like good news, but it was the smallest drop since April 2008. Experts were quick to take notice.
“It is real and it looks like a turn,” said Karl Case, an economics professor at Wellesley College and co-creator of the S&P/Case-Shiller indexes. “It’s not going down any more and it’s beginning to come up. That’s very good for the future of this financial problem.”
Surge in Sales, Drop in Prices
Nationwide, homes sale increased more than expected, to the highest level in almost two years. Nevertheless, home prices are expected to fall another 13% in the current quarter, according to the National Association of Realtors (NAR). NAR then predicts price declines to slow to 2% in the fourth quarter before gaining 2.3% in the first three months of 2010. “The sharp freefall in prices is over,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York.
California Prices
Despite the “good” news nationwide, California home prices continue to plummet. Prices fell 20% in July from a year earlier, thanks largely to the number of foreclosures sold at steep discount rates. For example, the median price for a California home dropped to $285,480 last month from $355,000 a year earlier. However, July home prices did rise 3.9% in the past 30 days — a clear positive sign.
A Long Ways to Go
Although some experts are predicting that the worst of the real estate downturn is behind us, there remains plenty to be cautious about. $3.4 trillion worth of U.S. houses are at risk of default because the owners are “underwater” (i.e., they owe more than the market value of their home). If prices fall 5%, as they’re easily expected to do, another 2.5 million homeowners will have “negative equity”.
What does all of this mean for the Clovis real estate market? While there are some glimmers of a real estate turnaround nationally, keep in mind that real estate is “local” meaning that what happens in New York, Florida, or even Los Angeles doesn’t mean it will happen in the Central Valley or Clovis. Clovis home sales continue to be strong, however, the majority of these sales are foreclosures. With more foreclosures expected on the market in the next few months it’s doubtful Clovis home prices will see an increase anytime soon. Despite all of these negative signs, it remains a great time to buy a Clovis home. There are bargains to be had and opportunities to buy fabulous homes never seen before. Also keep in mind that it’s impossible to predict the bottom of the real estate market and whether Clovis home prices will ever be this low again, especially since mortgage rates are at historical lows. If you’re in the market to buy — let us know. We’ll help you find a bargain Clovis home.
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