This is a question I get asked frequently and one that I hear attempting to be answered. “Have we hit the bottom of the housing market? At times I have fallen prey to the common thinking that says, “How much worse can it get? The market has dropped ____%, how much more can it go down?” Then the conclusion… “We must be at the bottom.” Anyone with their head in the game has thought/asked this.
However, after just doing a little research you will find that there are key economic forces in play that have to change (unemployment for one) before “the bottom” is reached AND our economy comes out of the recession in which we find ourselves. Forecasters have been calling the bottom for the last 2 years or longer. So have we hit bottom yet?
For an excellent read on some of these economic factors, check out this article, The Orwellian Recovery. The author succinctly states, “I don’t see how housing prices can recover at the same time inventories, mortgage rates, and unemployment rise.”
A colleague an I were discussing this topic over coffee today… what’s going to happen when the government backs off the stimulus and interest rates rise?
It’s a complicated and highly opinionated topic, what are your thoughts?
Keith Klassen – Real Estate Broker