And maybe it still is.

NAR released numbers today that state exsisting home sales in September were the highest increase, month over month, since 2003.  Woohoo!, right?  Maybe not.  Nationally, home prices are still falling.  Even the eternally optimistic NAR econ-front man, Lawrence Yun, is cautious.  MSNBC reported Mr. Yun as offering the following: “housing may be starting to find a bottom but the turnaround could be aborted by the near-certainty that the country has fallen into a recession.”  

The industry-wide caution on the part of economists and analysts is inspired by falling home prices, due largely to an onslaught of foreclosures (and short sales), as well as tight credit markets and continued restrictions in mortgage lending.  My personal opinion, I don’t know how the banks intend to continue in business after the dust settles from the bail-out, with out increasing interest rates. They must, and will, go back up.

So now that I’ve sufficiently drained your glass of optimism to half-empty, let’s talk facts.  First, the only people that lose out on real estate are the folks that did not hold onto it long enough.  These aren’t bad, irresponsible people.  These are people that either a) had to sell for reasons beyond their control (life sucks that way sometimes) or b) were not sufficiently advised by the professionals they came into contact with during their home purchase.  Yes, I have walked away from a buyer that against all better advice, persisted in following a course of action that I felt would jeapordize the security of their future.  It is absolutely “on us”; by “us” I mean the real estate and mortgage professionals involved.  It is our obligation and fiduciary duty to ensure that our clients have the most current information available to make the most informed decisions, and professional advice from us, that is in their best interest.  My point being, real estate is a sound investment as long as it is held long enough.  This is the most basic of principles behind the bail-out.  The big-wigs in Washington know that they cannot lose with real estate, it’s all just a matter of time.  If this were not the case, the bail-out never would have moved passed Go.

How long is enough?  The market dictates that.  Recent years, enough had been 6-12 months in some areas.  Now, I’m advising my clients to expect to be in their home no less than 5 years, but more realistically, 10 years.  We all know someone from a previous generation, say our grandparents, that bought their first home for $27,000, forty years ago.  Maybe they are still in the same home.  If it’s still worth $27,000, I’ll be the first to write a check.  Call me.  With what’s left of my HELOC and change from my car’s ashtray, I’ll buy that house.

Another fact we should address, and something I try to drive home to every single client I work with, especially sellers, is that the market changes every single day.  Ok, maybe not as dramatically as the stock market in recent weeks, but it does change.  With the entrance of the www into mainstream media, as a society we have become more and more sensitive (and arguably more misinformed) to every little media blip about housing and real estate.  Some of the changes we are experiencing in the real estate market right now are necessary.  It hurts to undergo surgery, but it has to be done to start the healing.  Sometimes you are left with a scar.  We are completely under the knife right now with home prices and lending practices.  There is no way around it, it has to happen.

Yes, it’s good news that home sales are up.  It’s exceptionally good news during a dark time.  But it’s also good news that we are currently experiencing the necessary changes that will stabalize our market, and ultimately our economy.  It used to be that our nation’s wealth, on an individual basis, was defined and based upon home ownership.  At least in my generation and younger, there has been a shift in the definition of wealth to mean how much “bling” you have.  Cars, toys, clothes, etc.  Translate = how much credit you have, with home ownership just one more layer and source of credit.  Home ownership is not and never should have been viewed as a right of passage with an ATM card attached, but more of a hard-earned milestone that you scraped and sacrificed for, to secure your future, as it used to be.  Again, this is another necessary correction, on a totally sociologic plane that has nothing to do with home prices or inventory or interest rates.  It’s about getting our collective head straight.

I know I wrote a whole heck of lot to say, “It will all be ok.  It’ll hurt, it’ll take time, but hang in there”.   We got good news today, but the best news has been right under our noses for a while now.

Opinions expressed in this article are the opinions of author, and not to necessarily the opinions of Meadows Group Inc.
All rights reserved on all original content, non-original content is given credit | Michelle Berry | 2009