Proclaiming the bad housing market news

By Melissa Wirkus

So everyone knew that the housing market was slowing but it was not until recently that any real estate organizations confirmed what was really going on. For months now, industry insiders such as the National Association of Realtors, or NAR, denied that there were any signs of a declining housing market.

Now, everyone in the real estate and mortgage industries seems to be coming forward to proclaim the bad news – the market is indeed cooling off and they have the figures that show it.

A September 8, 2006 article by Jeremy W. Peters of The New York Times, “Some housing pessimism from real estate brokers,” gives some important information on the current state of our housing market.

“Concerns about the housing market deepened yesterday as the nation’s leading real estate brokers’ group issued a more pessimistic outlook for the year, and two major builders cut their earnings estimates by hundreds of millions of dollars. The news added to a growing unease about the economy and helped drive shares on Wall Street lower for the second straight day.”

It seems as though the market’s cooling has become a solid fact and is not something anyone can deny anymore, since the numbers prove it. Before, the NAR predicted that sales of homes would fall about 5 percent this year, and they are now giving a more realistic number of declines around 7.5 percent.

They also said they expect for prices to drop during the next few months, instead of their last statement that said they would only “appreciate modestly.”

It appears that part of the problem in this situation is the grid-lock between buyers and sellers. We have pretty much shifted from a seller’s market to a buyer’s market and there is a large surplus of homes for sale on the market. The problem is that sellers are a lot more obstinate than anticipated and are not lowering their prices. This is causing a lot of potential buyers to wait to buy in hopes that people will start to become desperate and lower the prices.

“The Realtors’ association said it expected both home prices and sales would slide in the coming months as the upper hand in the housing market shifts from the seller to the buyer. But that shift has yet to occur fully, with buyers and sellers staring each other down while unsold houses pile up. But once sellers begin to drop their asking prices, housing industry officials hope that home sales will start to rise again.”

Homebuilders are also jumping on the bad news bandwagon and have released statements that reflect the current state of our market.

“The revised realtors’ forecast came on the heels of announcements from KB Home and Beazer, two of the nation’s largest home builders, that profits this year would be lower than initially predicted. As KB and Beazer cut their earnings guidance, they cited a growing supply of unsold homes.”

“‘A higher percentage of home closings are being deferred or canceled,’ Beazer said in a statement yesterday, ‘immediately prior to closing in many cases, due to worsening buyer sentiment and the inability of buyers to sell their existing homes.’”

We can only hope that things will not get as bad as anticipated and the housing market will slowly adjust itself and come back to life.

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