July 7, Weekly Analysis

The single new listing in the Meadows this past week is highlighted on the list.

There were no Meadows homes going into Pending this past week.

There was only one home that Closed Escrow this past week: 10228 Oak Spur Way, a 4/3 of 2,601 s.f. which sold at a closing price of $390,000.

If you do not recall a more sparse report in recent memory, neither do I. We have not had such a slow week in a long time. It is just possible that we have reached an equilibrium and there are few available Buyers. One of the imponderables in real estate is the pool of available Buyers – it is the unknown in every market equation.

The one thing we do know is that when Buyers think the interest rates are falling, they will wait – hoping they fall still further. And, when interest rates are rising, Buyers jump in to get the rates before they rise further.

Recently, interest rates have fallen, and that discourages immediate purchases.

Nevertheless, showings continue at a high rate, calls continue and flyers disappear at a reasonable rate so there is some confidence that this week was just a temporary hiatus. If this week is duplicated for several weeks, then we know there may be trouble but other indicators are still positive.

In a presidential election year there is always uncertainty, and when that happens in the midst of a recession that uncertainty is multiplied. The recent job numbers have been insufficient to even fill the ranks of the new workers who come into the job market every month, much less eat away at the ranks of those who have been unemployed for quite some time.

The bad job growth numbers are partially the result of bad economic policies but some of it is the result of structural changes in the labor market – companies have found that through the employment of technology they can make good profits even with a slimmer labor force. Consequently, we find the stock market growing, while the unemployment numbers remain high. When companies shed their excess labor force, they did it without penalty to bottom line, and there is no incentive for them to change.

We may be looking at a “new norm” of a future unemployment rate of nearer 7% than 4%. Among other things, that equates to a slower recovery of the housing market PRICES, if not sales. The construction industry has been hit hardest by the recession, and contractors will try to start building because that is what they do. If they come back too fast that will again depress prices.

There are still foreclosures held in inventory that the banks will slowly feed into the market.  I look forward to sales continuing, but at these lower prices for at LEAST five more years.

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