Wednesday, January 6, 2010

Housing headed for a double-dip...I don't think so

An article on MSNBC and other media outlets reported that according to the National Association of Realtors, the number of people preparing to buy a home in November dropped -- the first decline in 9 months. Here's the article:

The concern is that the only reason sales have held up is government tax credits and lower interest rates. Sure, those have helped but they're not the only reason. In a lot of markets around the country investors have been buying homes because they can rent them out for more than the mortgage payments. They've depleted low-cost inventory locally in most markets. Even city governments are getting into the act such as when Menlo Park bought properties within city limits as affordable housing. Investors are not being driven by the tax credits.

Even without investors, inventory levels are low locally and sales strong. Look at my post on Monday about closed and pending sales in Los Altos. If we see a dip in demand, it will likely remain at the top end of the market (which is still weak). There are sufficient buyers to keep local sales strong.

As for the rest of the economy, manufacturing is up, job losses are dropping, and consumer spending is improving. All these signs in the last few weeks point to a stronger economy. As those bolster consumer confidence and the media speak positively about real estate, we'll see the housing market continue to improve.

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