Thursday, 23 July 2009

Home Sales - Which Metros have Bottomed?

There are quite a lot of housing related data such as Case-Shiller,, FHFA, Dataquick, etc... Because of increased number of transactions, some people think real estate market has bottomed and we begin to see "bidding war" in some markets.

Firstly, I think, it depends on the markets. Secondly, there will be second dip in many markets due to growing foreclosure inventory and deteriorating economy.

There are a few articles about by-metro real estate forecast as follows.

1. WSJ - Home Sales, All Over the Map

Jody Kahn, an analyst at John Burns Real Estate Consulting

- Washington DC, especially in Alexandria and Fairfax VA.
- San Diego CA
- Sacramento CA
- Denver CO
- Raleigh, NC
- San Jose, CA
- Austin TX
- San Antonio TX

- Detroit MI
- Phoenix AZ
- Las Vegas NV
- Miami-Fort Lauderdale FL
- Chicago IL

Thomas Lawler, Lawler Economic & Housing Consulting, LLC

- San Diego CA
- Sacramento CA
- Minneapolis MN
- Boston MA
- Washington DC (Virginia suburbs)

BAD (high unemployment and over-supply of housing)
- New York City
- Seattle WA
- Portland OR
- among others

Mark Zandi, Moody’s

- Washington DC
- Minneapolis MN
- Houston TX
- Dallas TX

- Detroit MI
- Las Vegas NV
- Los Angeles CA
- Miami FL
- Orlando FL
- Sacramento CA
- Portland, OR.

2. SmartMoney Magazine "5 Housing Markets That Have Further to Fall"

- Detroit MI
- New York City
- Phoenix AZ
- Portland, Ore.
- Minneapolis


Rank Market 2009 Forecast
1. Detroit, MI - 36.8%
2. Manhattan, NY - 32.8%
3. Grand Rapids, MI - 28.4%
4. Phoenix, AZ - 25.9%
5. Miami , FL - 24.2%
6. Long Island, NY - 22.7%
7. Las Vegas, NV - 21.7%
8. Fresno, CA - 20.2%
9. Bakersfield, CA - 19.3%
10. Riverside, CA - 19.1%

Rank Real Estate Market
1. McAllen, TX
2. Casper, WY
3. Biloxi, MS
4. Logan, UT
5. Bismarck, ND
6. Sioux Falls, SD
7. Austin, TX
8. Corpus Christi, TX
9. Baton Rouge, LA
10. Idaho Falls, ID

To summarize:

- There are massive amount of of foreclosed properties. At one point, bank will start fire sales and bring price down significantly.

- Metropolitan areas that face high unemployment rate (like Las Vegas) will continuously have downward pressure on real estate price.

- High end and luxury properties so far tend to hold on high value compared mid-to-low priced properties. Due to increasing lay off and deteriorating economy, there likely to be price correction in high-end market.

- On the contrary, real estate price in metros with steady economy may have reached bottom.

Therefore, the real estate value in Las Vegas, Arizone, Florida and inland California (with high unemployment and massive foreclosure) are very likely to have second dip. In addition, real estate value in the markets like Seattle, New York City and Portland (where real estate correction started last) are likely to continuous fall.

Happy Investing!!!

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