From Henry Blodget on BusinessInsider.com…(my thoughts are in red)
Inside Mortgage Finance sponsored a nationwide survey of 1,556 real-estate agents in mid-June. The responses are largely anecdotal, but they’re still interesting. They also support several key themes in the housing market:
* The low end of the market–driven by foreclosures, first-time buyers, and investors–is cranking. Prices have fallen to the point where buying is often cheaper than renting, and the government’s $8,000 first-time-homebuyer gift is helping many people jump in. Investors are also leaping in–either flipping houses bought at auction or planning to rent for a few years and then sell. Prices are low, but velocity is high. – Definitely true!
* The high end of the market is dead–because sellers are still in denial, existing homeowners aren’t trading up, and there are fewer foreclosures and forced sales at the high end (this may change). We and others still believe that the high end of the market will be the next shoe to drop in the housing market collapse. – Can’t argue with that!
* For those who already own houses, “affordability” is not a particularly meaningful measure of housing-market health–because they can’t sell the houses they already own. Housing bulls often point to record “affordability” as an argument that house prices are about to rebound. Affordability is certainly driving sales among first-time buyers, but it doesn’t help much in the existing-homeowner segment. Only 29% of current buyers (per the survey) are existing homeowners. – Those with some cash have found that bringing money to the table to sell their home and moving up can actually get them a great deal on a more expensive home, wiping out any loss they had on the sale and coming out ahead on the new home. I’ve helped some of these clients, but there are certainly a lot of people that aren’t in that situation and fit into the example Henry writes about.