Subject: Re: [Homestead] Home appreciation forecast at 6.4 percent for 2006
Date: Fri, 14 Apr 2006 07:38:15 -0500
Notice that the source of the view the housing market is still
all roses is the NAR. Don't suppose there's any whistling past the
garveyard going on here, now do we?
Fair question. I have about 35 years history with NAR. My observation
is they have the best collection of facts on the housing market in
the USA and their forecasts are dependable. NAR would lose hard-won
credibility if they padded numbers. There is no incentive to do so.
NAR is relied upon for real estate facts by many groups of people.
The National Association of Home Builders may have a superior data
base of new house permits and completions, but Realtors typically
sell new homes as well as existing. The Mortgage Bankers Association
has superior numbers on numbers of mortgage aps and closings. All
three organizations are useful.
That said, it is apparent that I have not yet impressed upon you the
importance of unique local conditions. What's happening in Phoenix is
not happening in Philadelphia. The housing market is subject to LOCAL
supply and demand. Population growth, job growth, interest rates and
housing supply all affect individual markets. One reason I have
decried the bubble talk of the last couple years is because it is
based on selected state or local markets that are then extrapolated
to indicate a national condition. That is unreliable at best. Many
self-proclaimed experts have looked at Las Vegas or parts of Florida
as proof of impending disaster. Both those places are now in the
process of adjusting to local conditions; neither has ever been
indicative of national trends.
The term "bubble" is simply not appropriate. A bubble is pricked and
it bursts immediately. It is absurd to assess the national real
estate market as such. Local real estate markets continually adjust
to local conditions in far less sudden movements.