Hopes for any near-term recovery in the housing market are likely to evaporate as this week unfolds. Already, today, we have the National Association of Realtors report that, although existing home sales climbed in July, prices continued to erode across the nation as inventories rose as well. With that kind of news and further tightening in lending criteria, even the rosiest of economists do not predict an end to the slide until 2010. And then, say many, we can expect a few years of flat prices.
Tomorrow we will get the S&P/Case-Shiller home-price index report for June that will no doubt echo the NAR bad news on prices. The report provides year-to-year price comparisons for 20 metro areas. Also on Tuesday, the U.S. Department of Commerce will report on new home sales for July. Given dramatic price cuts and other incentives by national home builders, maybe there will be a positive surprise in that report, but we probably should not put too much stock in whatever number it produces since the numbers will be somewhat artificially stimulated.
If you have planned to move in retirement or buy a vacation home and believe things will continue to erode for the next two years and remain flat for a couple of years after, it seems you have two choices - wait until the market gets better, or relocate now, assuming you can sell your house at a fair price. The price at which you list your house is less a function of what you think is fair and more about what you are going to have to pay for your next house. If you are moving to an area like Charlotte, NC, where prices have not only held up but also improved a little, waiting may be a losing proposition. Five years from now, you may sell your primary home for a little more than you can today, but that home in Charlotte or many other places in the southern U.S. will be appreciably more expensive later. The gap will widen.
