Heading Down The Home Stretch for 2012

Here we are. Almost Thanksgiving.  Heading down the home stretch of Real Estate 2012.  My how time flies when we are having…having…whatever this is that we’ve been having.

Still doesn’t have a name that quite captures its strange essence does it?  Kind of a recovery that’s still in recovery.   But at least we can use the word recovery now.  We’re making progress.  That’s something to be thankful for even if we haven’t gotten completely past the point of worrying about a relapse.

Has it really been five years, going on six, since the market peaked, the bubble burst and we all began the long, drawn out process of erasing everything we thought we knew about real estate?

Redrawing the boundary lines. Gerrymandering the process.  Reinventing the real.  On the fly.  In full-tilt, pendulum-swinging boogie.  Rube Goldberg and his Merry Band of Tinkerers continuing to madly tweak the cogs and levers and gears of the economy’s perpetual motion machine because it can’t stop long enough to be intelligently rebuilt from the ground up.

We’ve been busy looking for all those illusive long term quick fixes.  Or at least some way to punt the can far enough down the road so everyone has time to suck in a big cleansing breath and issue a huge sigh of relief, before having to head back out, trekking toward the far country of a decidedly uncertain future again.

So let’s stop in to see what condition our condition is in.  This week and next, we’ll take mindful inventory (remember that word – inventory) of a few developments that have taken place this year.  Chronicle some of the hits and misses that mingled closely with our hopes and fears.

First, let’s look at the big board that monitors Real Estate’s vital statistics:

Number of Home Sales Up? Check.  Median Prices Up?  Check.  Average Prices Up?  Check.  Average Days on Market Down?  Check.  So far so good.  All sounds pretty healthy doesn’t it?  (See yesterday’s Sentinel Article on local market trends.)

Interest rates?  Still hovering near historic lows.  What’s not to like about that?  Is the credit crunch improving? Loans do seem to be getting easier.  Mortgage Brokers are figuring it out.  Assuming of course, that the entire system doesn’t start making wholesale changes again on a daily basis – knock on wood.

Maybe we are just getting more used to the torture. Resigned to the fact that the loan process is just going to take longer and there are just going to be a lot more hoops to jump through. Maybe the new norm should be harder. That’s ok – as long as we know what to expect and can prepare ourselves.

The distress market?   Becoming less of a shock to the system.  People are less guilty about walking away from their bad debt.  Less worried that they’ll never buy another home.  Less convinced that their credit scores are what defines them as human beings.  Everyone has struggled or knows someone who has struggled mightily.

Short sales are still part of the vernacular and they are still certifiably crazy.  But there have been a few incremental signs of improvement in the last year.  Occasionally it almost seems like there’s a hint of intelligence operating behind the curtain on some short sales.  A collective brain that understands what it is doing – even if it isn’t doing it very well.

REOs?  Yep.  There have been plenty of these odd and ugly ducks in the marketplace this year. There’ll be more in 2013 and beyond. And they’ll keep coming until the huge buried backload of toxic loans has been flushed through the system.

As long as there is a huge shadow inventory hanging out there in the ether, real or imagined, the market can’t improve beyond a certain point.  The spectre of too much potential low-end supply will exert an invisible gravitational pull and hold rising prices in check.

More next week.

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