Submitted by Eve Whitaker, REALTOR
By: Albert Bozzo, Senior Features Editor | 01 Apr 2009
Please Click here for entire article on CNBC.
One hour outside of Washington DC, in the picturesque small city of Martinsburg, West Virginia, some homes for sale are attracting bidding wars—again. “Prices are so low, we’re starting to see that,” says Marc Savitt, a realtor there for a quarter of a century. “In our area, you’re at the bottom.” Savitt, who’s also president of the National Association of Mortgage Brokers, might be accused of being overly optimistic. But he is hardly alone in sensing a long-awaited bottom in the real estate market.
For most at this point, it’s less a matter of bold confidence that cautious optimism, but data are emerging to make a reasonable case. Three categories of home sales—new, existing and pending – all posted surprise gains in February, along with housing starts are posted surprise gains in February.
“There are encouraging signs that we’re near a bottom,” says Nomura Securities Chief Economist David Resler, who is among those who have been calling for a bottom in the late first half of 2009. “The signs of improvement we’ve been seeing have to be recurrent. One to two months isn’t enough to establish it; it needs to be a stretch.”
Though the housing market still faces significant headwinds with foreclosures and unemployment on the rise, a number of positive forces may finally have enough traction to stop the market’s brutal two-year descent.
Headwinds & Tailwinds
Housing affordability has soared in recent months, while mortgage rates have sunk to at a record low. The median price of a home is down 15 percent from last year and 26 percent from the 2006 peak. And first-time buyers are now eligible for a one-time $8,000 tax credit. The number of properties available is down 18-percent overall from the July 2008 peak, while inventory has been under a 10-month supply for three months now.
“We’re seeing a tremendous uptick in activity.” says Savitt, who estimates business is up 50-60 percent from a year ago. The eastern panhandle of West Virginia, of course, is but one market, but there’s even anecdotal evidence that conditions are better in the diverse markets around the country.
“The hardest hit areas—California, Florida—hinting at a bottom,” says economist David Jones, who’s also something of a housing optimist. “There’s a lot of good sentiment in the air,” says David Olson, a former head of research at Freddie Mac who founded Access Mortgage Research, which provides data to lenders. “I talk to them everyday.”
Sentiment, indeed, confidence, most say, is the key ingredient to build momentum for an imminent bottom in sales followed by a bottom in prices, about six months later.
“We are close to the bottom,” says Lawrence Yun, chief economist for the National Association of Realtors. ”Once home sales begin to rise that could boost home buying confidence and get others off the sidelines.”
The past week has also brought a glint of optimism in economic forecast from key trade groups.