Monday, August 10, 2009
Collin County Housing - Will the rebound be quick or slow
Most of us have had a year of stagnant real estate prices or perhaps declines depending on your property value and location. Homes in the 300K and up price points have been under pressure as the demand for these properties has been slow to re-enter the market. Abnormally high interest rates on jumbo loans and the fact that these properties generally do not have the benefit of a first time buyer armed with a tax credit leave these properties orphaned and in search of buyers. We have now seen some positive news on job numbers. While we are still losing jobs, we are losing them at a much slower pace. This is the signal of a change in the economic trend. I believe that we will see even better numbers in the weeks ahead which will confirm that we have indeed reversed the trend. So the question then becomes will we see a V shaped recovery, an L shape or a W. The speed at which the local economy recovers will dictate how quickly we see housing prices start to rise. Since our local unemployment is much lower than the national average and I think our local industries have been less affected by this recession, I believe that we will see a more V shape or U shape in the recovery. Markets tend to react to circumstance and how quickly they react is often due in part to how quickly they moved to their tipping point. We have seen a swift and violent shift downward in the economy. This market did not take years to correct, merely months. I think we are in place to see a rather quick recovery in the local housing market. Builder inventories are low and they are not building inventory. I talked with one major builder last week who mentioned that they would be reducing their incentive packages very soon. In other words they are seeing more demand and less need to discount. The roadblocks to this recovery could be in the form of mortgage money and how quickly a borrower can get it. The lag time for loan processing is getting longer and longer. The documentation for loans is becoming more and more burdensome. All of this will effect the time necessary for homes to clear the market. As lenders become more comfortable that they have in place the controls which they so blatantly ignored in years past, we should see a slight easing of available funds. With the resurgence of the economy, the cities of Plano, Frisco, Allen and McKinney are all well positioned to lead the area as well as the nation in job growth and housing growth.