Palm Beach County Real Estate…Celebrate or Wait?

by Rodney Forbes on August 31, 2009

Breaking News: Case/ Shiller Housing Index Shows Second Month In A Row Of  INCREASE IN SALES!

champaign-200x300We have been seeing continued reports of the strengthening of the national real estate market. Certainly in Palm Beach County Florida, one of the first and hardest hit areas in the country, the numbers have continued to move positive.

In areas such as Palm Beach Gardens, Jupiter and West Palm Beach, short sales and bank owned foreclosures are making up a large part of the pending home sales as first time home buyers are rushing to take advantage of the low interest rates, the First Time Home Buyer Tax Credit, and home prices that haven’t been seen since 2004. Many homes in the area are actually having multiple offers presented.

The following excerpt provides speculation the long awaited end to the real estate crisis may be at an end.

The national home-price index released on Tuesday rose for the second straight month in June, fueling hopes the housing downturn, which is in its third year, is waning. Still, the index was off roughly 15% in the second quarter from the year-ago period. See Economic Report.

In a teleconference Tuesday, Shiller was reluctant to call a definitive bottom in home prices, saying he’s seeing “conflicting signals” in the housing market.

Well then, I will do it. There is a clear bottom in most housing markets for homes that are less than $200,000. Will this last? I think it will. There first time buyers and investors out there that there won’t be any further significant value decreases for homes less than $200k. Now, with that said, if the ‘First Time Buyer Credit of $8,000′ is not renewed….and if the banks make the mistake of dumping too many foreclosures on the market too fast…all bets are off.

On the positive side, the rise in home prices in May and June is a “sudden break in momentum” from years of nearly steady, punishing declines that may signal a turning point. “The roller coaster is now going up,” Shiller said.

Yet he noted what appeared to be a housing recovery in early 2008 “fizzled” when prices resumed their decline. And a long-term chart of home prices makes it look like “we are still in the process of a bursting bubble.” Shiller expressed “great reluctance” to forecast where prices will go from here with the U.S. economy in the midst of the most severe recession since the Great Depression.

Where will prices go? There WILL BE more depreciation for the more expensive…non first time buyer/ Investor price ranges. In some cases this depreciation will be dramatic. We are predicting that the next wave of foreclosures will force the ‘upper end’ housing markets to lose as much as 30%+ over the next 12-24 months.

“Unemployment looks like a bad indicator for the housing market,” Shiller said.

There are other challenges that could snuff out the nascent revival in home prices. One of the biggest threats is the mounting wave of foreclosures as more strapped borrowers struggle to meet their monthly mortgage payments. The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.

The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.

Indeed, recent experience has taught homeowners that prices can be very volatile, said David Blitzer, chairman of the index committee at S&P, during Tuesday’s call.

On a national level, home prices are back to levels last seen in 2003, but the cities that saw the biggest run-ups also fell the hardest.

“The idea that they could never go down was wrong,” Blitzer said.

He added the data coming out of the housing market in recent months have been encouraging, but warned against breaking out the champagne just yet. Commenting on so-called shadow inventory, he said many sellers have been waiting for an uptick in house prices to put their homes on the market, Blitzer said. This could exacerbate the supply glut and push a recovery further into the future.

Source: MarketWatch.com

If you are interested in buying or selling a home in the Palm Beach County area, specifically Palm Beach Gardens, Jupiter and West Palm Beach, please visit my Forbes Realty website. For frequently updated information on foreclosures, short sales, real estate news and market conditions visit my South Florida Real Estate Report blog. There are many free reports as well as free access to MLS listed properties. You can also call 561-337-4810.

 Rodney Forbes is a licensed Realtor®, certified short sale/REO specialist and broker for Forbes Realty of South Florida Inc. Rodney has co-authored the book “Should I Short Sale My Home?”. Get your FREE copy at www.SouthFloridaRealEstateReport.com

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