Friday, November 14, 2014

Can You Make Sense of the Housing Market? More to the Point, Should You?

Here are some recent housing market headlines:

"Falling home prices is a good thing." --Zillow.

"Falling home prices is not a good thing." --Lynn Effinger, Housing Wire,

"Sales of existing homes are down." --Bloomberg.

"Sales of existing homes are up." --Bloomberg.

"Student debt keeps Millennials from buying homes." --Goldman Sachs

"Millennials will too buy homes." --Builder Magazine

"Now is a great time to buy a house." Anyone from the National Association of Realtors, anytime.

I can seriously go on with this. You know, the mortgages-are-easy-to-get alongside the too-few-can-qualify kind of thingy that pervades all things real estate. Two points, though. The first is that nobody really knows. Not knowing never stopped anyone from opining, though.

The second is that the competing, self-cancelling buzz creates confusion and discomfort among both buyers and sellers. Why pull the trigger when you don't know which way the barrel is pointing?

It's good to consider a couple of data points few ever talk about. The first is the low number of homes on the market. Besides many owners still having zero-to-low equity, it's worth remembering that many of these houses are owned by Baby Boomers who don't want to sell because there's nowhere for them to go. They don't need to move for a new job, most aren't retiring in Palm Springs or Scottsdale, and they're not ready for assisted living. Inventory will be low for a long time.

The second is that people just don't get paid enough and their job security isn't all that great. That situation seems to be improving (says Janet Yellen), but until wages and job security uses, not much will change.

So what do you do if you want to buy or sell? Heck if I know, and neither does anyone else. Buy or sell, I guess.