Where is the bottom for the housing market (in your neighborhood)?

by Gerri Willis

You may have seen the recent headline that the housing downturn we are currently in is worse than the one experienced during the Great Depression. According to Case-Shiller data, prices have fallen some 33 percent since the market began its collapse, greater than the 31 percent fall that began in the late 1920s and culminated in the early 1930s. True enough, but the reality is this: Your community may or may not be in a double dip in home prices, cratering to the worse fall since the 1930s. I say that because, simply put, there's not just one real estate market. Every state, city and county can have different dynamics depending on local factors.

However, if you want to know the future of your own market - here's how to read the local tea leaves. First, check out your local employment picture. Are companies still in layoff mode? If people are still losing jobs it will be difficult for your housing market to recover. That's because people without jobs don't typically buy new homes. If there are consistently lots of ads in the paper for jobs and stories in your local newspaper about local employers expanding, your community may already be in recovery mode.

Time on market is another important consideration. The bust has meant that the inventory backlog has expanded as homes fail to sell. Currently, the national market is experiencing a nine months backlog of housing. More competition means lower prices and lower prices is bad for the market. If your town has inventory of just three to six months, your market may well be on the road to recovery. Scans local realtor websites or the local realtor's association website for details.

And, finally, check out the number of foreclosures going on in your city by going to RealtyTrac.com. Areas with high foreclosure rates - think Nevada where one in every 103 housing units received a foreclosure notice in May - will be the last to recover. And, remember - it's not a national market. While Nevada's foreclosure rate has skyrocketed, only 1 in every 9,589 housing units in North Dakota have received a foreclosure notice.

In truth, it's all relative. My home was built in 1933 - in the depths of Depression. You'd think nobody would have the capital to build. Clearly not true. There are exceptions to every rule - and may your neighborhood be one of them!

Surviving the double dip in housing prices

by Gerri Willis

Take a close look at those housing numbers out today - and you'll begin to understand how deep the housing crisis really is. U.S. single-family home prices dropped in March to fall below the low hit in April 2009 - that was right smack dab in the middle of the financial crisis. In other words - as I've been saying - we really are facing a double dip in housing prices. The S&P/Case Shiller data released today tells the story: Its composite index of 20 cities declined two-tenths of a percent from February. The national index, the 20-city composite and 12 cities all hit new LOWS through March 2011. The national index fell 4.2 percent over the first quarter alone, and is down 5.1 percent compared to its year-ago level. For homeowners - a quarter of whom are already underwater - owing more than their home is worth - the news is not encouraging. And , it's clear that you won't be able to rely on any government programs to bail you out. The first-time homebuyer's tax credit is simply extending the pain of the downturn rather than fixing it; while President Obama's HAMP program has had precious little impact. The good news is that owners don't have to realize this loss unless they sell or need to refinance their mortgage. If you're in that position, you may well be able to hang tight until the market improves. In other words, you're going to have to survive on your own. My advice if you are waiting out this downturn: Don't overinvest in the house you are living in. If you're tempted to drop a lot of cash building an addition or a state of the art kitchen, don't even consider it unless the improvements are matched by your neighbors' homes. The last thing you want to own is the fanciest home in your neighborhood. You'll have a hard time reaping the benefits of that investment. If you can drop your costs by refinancing - 30-year fixed rates are at 4.5 percent for people with good credit - do it.

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