Here’s a real eye-opener for you: Clear Capital is reporting that nationwide, real estate prices have declined 5.9% in just two months. This perhaps comes as no surprise to anyone who follows the real estate market closely – except that a lot of people who do follow the market closely are saying that prices are stabilizing and we’re on the road to recovery, etc. As with anything, caveat emptor, and I wonder who signs their paychecks?
This news comes on the heels of an interesting conversation I had with a veteran broker in our area. As it happens, I met Vince Brown over the weekend, and he’s the guy who originally started my brokerage, Thunderbird Real Estate, back in 1964. I asked him, “So what year did you actually get started in Real Estate?” and he said 1962, which means he has been doing real estate for forty-eight years here locally. “Wow, ” I said, “that’s a long time. And in that time, how does today’s market compare to other markets over that time?” Vince didn’t take but a moment to answer: “This is, by far, the worst real estate market I have ever seen.”
Worst real estate market, by far, in 48 years. For what it’s worth, Vince also forecasts the market will remain in its current doldrums for another couple of years, and then slowly begin to climb its way back up the appreciation ladder.
I wonder, though, how many more rungs down are we going to drop in these next two years? Declining prices can mean only one thing: still more defaults and foreclosures. Analysts have long cited negative equity as the primary driver of “strategic default” – so as homeowners increasingly fall into a negative equity situation, we can expect the foreclosure pipeline to grow. Which itself may have a further dampening effect home real estate prices. A truly vicious cycle.
