US Home Sales Recovery

There has been so much commentary recently regarding the U.S Housing market, and it’s current state of depression. There’s an idea that popped into my mind recently, and I wanted to share it with everyone, and see what the response would be.

We are receiving daily news and statistics relating to the current housing depression in the U.S, and how foreclosures are up, and prices are down. But could it be that prices are away to rocket back to previous highs? I say this because of my theory about the state of the current market. Around 50% of all home sales right now are distressed - meaning forced into sale, for whatever reason. In a recent U.S report on housing statistics, the study revealed that 30% of homeowners said they would put their homes on the market, if they saw what they considered to be an upturn in the housing market.

So if U.S Realtor statistics tell us that 50% of all home sales in the U.S are distressed, resulting from people selling to avoid forclosure, or banks selling foreclosed properties, then this indicates that there is probably a large percentage of the population not selling - they’re waiting for the economy to improve so they can achieve higher valuations. Subsequently, the properties that are available on the market right now have pushed prices down, and probably will continue to do so for some time.

So what happens when these sellers get back in the game? Well, it’s going to push prices right back up. We should also consider this: not only are there sellers waiting to get back into the market, there are also hundreds of thousands of buyers too. Right now, the majority of buyers are those cash-rich investors, who are looking to expand those portfolios and pick up bargains. Authentic housing figures may not be a reflection of a real, functioning market for many months. The majority of sales right now are coming from extreme points of the buying and selling scale: Investors and distressed sellers. This is true for both the U.S. and U.K. markets, which have been savaged by the recent collapse in real estate prices.

Many commentators are predicting the recession to continue in the U.S through 2009, and a recovery in the beginning of 2010 (Billionaire Warren Buffett included.) There will inevitably be a colossal housing surge again, it’s just a question of time. I see a genuine recovery coming mid-2010. Before then, there will be pockets of recovery all across the U.S. and the U.K, as each state reacts to varying economic factors through their own unique economic fundamentals. The U.K., being a relatively small island, with limited land space, continues to bottle up demand and repress new housing construction, further amplifying the pent-up demand for housing. It’s not that no-one wants to buy, it’s that very few people can afford it, under current banking credit restraints.

Watch out for the explosion in U.S. and U.K. house prices mid-2010, when credit becomes available again.

Steven Reid
Head of Communication
http://www.sell-my-house-quick.com