I’m not saying that the realtors are living in la-la land. They have a job to do. They have to sell houses for a living, and therefore it is in their best interests to put the most positive spin they can on the data they offer. I do, unlike some, believe their data, and I don’t think they futz with the numbers to their advantage.
That said, their analysis today leaves me scratching my head. The NAR’s Chief Economist, Lawrence Yun, claims things are already improving in housing and will continue to now because, “The credit crunch has worked itself through.” Hello?
The Treasury Secretary’s plan, announced only four days ago, to save subprime borrowers has drawn more fire than Bugs Bunny happening upon Elmer Fudd in an open carrot patch, and reports of “write-downs” or losses from bad mortgages are still topping the daily newswires.
And then there is just fact. Yesterday I dropped my daughter off at a play date. The friend’s house had a “For Sale” sign in front, so I hung around to chat up the mom. She apologized for the lack of ornaments on their Christmas tree. “You see, we packed them away because we never ever expected to still be in this house in December.”
This house, by the way, is in a much-coveted DC neighborhood (excellent schools, safe, more affordable than swanky nearby ‘burbs or Georgetown). The house is moderately priced, below the appraisal even, but in 3 months, not a bite and now that it’s December she has no hopes for the rest of the year.
This is not a starter house, but perhaps a step-up house from a starter home. The mom says she has been told and believes that she can’t get a nibble because her prospective buyers can’t sell their own homes--all thanks to the lack of mortgages out there. Plus, she’s concerned that she won’t be able to buy the new home that’s currently being built for her in Virginia, because no way can she get a bridge loan these days.
So there you have it. The credit crunch…stopping the sale of an existing home which will in turn leave another builder with another new home on his books.
Questions? Comments? RealtyCheck@cnbc.com