Submitted by Leslie Ransom, REALTOR®, and Founding Partner Atlanta Fine Homes Sotheby’s International Realty
Every cloud has a silver lining.
Blue-chip companies Home Depot, Caterpillar, Pfizer, Boeing, Sprint, Corning, and Dupont all announced major layoffs. Even Starbucks, a company where the newly unemployed often seek work, announced it was axing up to 7,000 jobs.
However, the silver lining is that heavy layoffs are often a late-cycle indicator, meaning they most often occur when the worst is almost over. More silver linings could be found in the housing market. The National Association of Realtors reported that sales of existing homes reached a seasonally adjusted annual rate of 4.74 million units in December – the largest rise since the early phase of the housing boom in January 2002.
The surge surprised many industry pundits, but not us. We’ve stated many times in these missives that lower prices spur demand, and no one can argue that prices are definitely lower. Of the homes that were resold in December, half cost less than $174,500. Many market watchers noted that foreclosures and short sales accounted for 45% of the existing-home sales. True, but again there is a silver lining.
Hope Now, the private-sector consortium of mortgage servicers, counselors, and investors, announced that its members, along with the larger mortgage lending industry, completed a record-high 239,000 foreclosure prevention workouts in December 2008. We expect even more workouts to be completed in coming months, which should help reduce the rate of foreclosures hitting the market.
New-home sales tumbled 15% to an annualized rate of 331,000 sales in December, but the silver lining is that less inventory is hitting the market as a result. You don’t add fuel to an inferno, you don’t add inventory to a glut. Most homebuilders get the concept.
Finally, the U.S. economy staggered into 2009, with fourth quarter gross domestic product – total output of goods and services – slumping 3.8%, the most in 26 years. The silver lining? The economic consensus was for GDP to slump 5.2%, so things might not be as bad as everybody thinks.
Source: Synovus Mortgage