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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Friday, December 21, 2007

2007 Housing Recap: The Forest Through the Trees

Below is a short, unusually concise video from Bloomberg on the national housing markets. Seemed like a good posting as 2007 draws to a close.

So many statistics to process, it is often difficult to see the forest through the trees. The truisms remain; too much supply, declining demand, inventories must fall by way of lower production and prices. Booming foreclosures will not allow the bottom to arrive very quickly.

In order, the fundamentals examined here are:
1-2008, not so hot either, with 2007 total home sales down 14.5%, and 2008, maybe down 12%. Adjustable rate mortgage resets are key here as Jonathan Miller has pointed out. It will be August, 2008 before the dollar value of those resets return to Spring, 2007 levels. Then the market has a chance.

2-Median home prices will decline in 2007 and in 2008. We have repeatedly looked at national numbers, (our local ones are essentially no different, depending how one slices them), from a law of supply and demand point of view. Housing Intelligence sums it up nicely, as we noted regarding the October numbers. A drastic decline in inventory of both new and existing homes is badly needed, the path to that stability is paved with less building and lower prices.

3-Foreclosures remain a heavy burden for many months and will contribute to rising inventory problems. The influence wielded by these mortgage defaults appears to transcend the maxim that all real estate is local.

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