Out on a Limb

I call this column Out on a Limb because that is exactly what I am doing, going out on a limb by putting my opinions in writing as to where the market is going. I am pretty confident in my opinion because I have been doing this for years and I study our market daily. This year, though, is the first time that my "gut" feeling and the numbers are conflicted. On one hand I see our inventory rising and our contracts slowing. In simple terms of supply and demand, this is not a good thing. If we get too many homes on the market and not enough people buying them then pricing has to drop and as that is all people can compete on. That being said, my gut feeling is that the market is poised to jump forward. The phone is ringing, sellers are excited, buyers are actively looking and the general feeling is very positive. he stock market is up, unemployment overall is down and in our area we area actually very strong with jobs being created. Heck, once the builders crank up I think you will see an even bigger dip in those numbers as construction related jobs represented a big part of the unemployment numbers. Our area has been blessed in that while we lost jobs in the market overall, what actually happened was a shift and we gained jobs in the higher paying end of the spectrum. All that being said I feel that 2011 will be slightly better than 2010 and we ill see continued improvement as the year progresses. Consumer confidence lagged after the stimulus ended. Everyone thought that the market would fall apart after it ended and it became a self-fulfilling prophecy. Everyone waited to see where the market would go. Rates bumped up and that also put people on the fence and in a "wait and see" mode. I believe there is pent up demand to buy and as the year unfolds there will be a spike in demand as those that opted to "wait and see" realize that they have missed the bottom in both price and rates. The "have to sell" pricing from those that had to sell in the last quarter of 2010 will be gone and the sellers coming on the market in the new year with Spring in front of them will price higher. Interest rates having bumped up will affect us a little but they are still in the 4's. I look for that to increase as the year goes on. Wee keep hearing about the "shadow inventory" out there which is referring to a backlog of foreclosures but I do not see that having an affect in our market and I think the distressed inventory will stay at the same levels as last year. Relocation buyers start coming in March and once the sold signs start popping up there will be a flurry of activity. With nothing to further damage consumer confidence our market should be more consistent that last year's. I look for pricing to bump up in the first couple of quarters and to level out for the remaining part of the year. While I may be going "out on a limb" forecasting where the year will be going I am confident that it will be a good year overall and an improvement over last year. I would encourage everyone that is reading this to focus on our local market. The news tends to focus on National news and frankly what is happening in Florida, Ohio, Nevada, etc. is not what is happening here. We live in one of the most dynamic markets in the country and our underlying numbers are good. Even those articles you read about locally are usually a reflection of what happened 3-6 months ago as that is the information they have at their disposal. Every month (except January) I post a column entitled Front Lines and we call it that because it focuses on what is happening today in our real estate market. If you have questions shoot us an email or give me a call and you will get a straight, honest answer based on years of experience and current local statistics. We will as usual keep you informed.