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Is the Housing Market Done Falling?

By Lauramartindale @LauraMartindale

I came across an article from The Market Oracle in the U.K. that talks about the U.S. housing market, current values, supply and demand, and whether the government can really prevent prices from falling further. Here’s the link:


Here’s a snippet that summarizes his main point:

“… With the housing market at the center of the credit crunch, any recovery in the housing market could quickly turn the Wall Street recovery into a Main Street recovery. Consumers would start shopping again. Employment would rebound. And stocks would likely make the next move higher. But we’re coming out of a genuine bubble decades in the making. And decades of overinvestment creating oversupply are rarely worked off in a couple of years … Now, we know the government has done everything it can to prop up the housing market. From tax credits to the Fed buying mortgage securities, no price has been too high. [But] the housing bubble was just like any other bubble. Prices must fall to a point where all the excess supply will be bought. All the costly government efforts have merely been delaying the inevitable ….”

In effect, he doesn’t think housing prices are done falling — he thinks it could fall another 10% or more — so it’s not a “safe” investment.

Relevant to our ongoing discussion about remodeling to increase a home’s value, he goes on to say, “… In the post-housing-bubble world, consumers look at what they can afford, not how much they can ‘flip’ a house for or how much equity they’re going to get while only paying interest on their mortgages … That’s why we have to look at what really drives housing prices in a normalized housing market: income, rental rates, and interest rates ….”

So, for those who are trying to sell a home, or for those who still want to buy a house as a turnaround project (“flip”), the main point I take away from his analysis is that, more than ever, you must make your home stand out from the crowd. I think you can still make money on a house project in many areas if you spend wisely and create a highly desirable home that buyers want more than the comparables and for which they are willing to pay up.

With this challenging objective in a difficult market, there is much that can modernize and enhance the look & feel of a home without having to spend a lot of money on major remodeling or adding square footage. Start with curb appeal, floors and paint, then move to kitchens and baths. An impressive front door helps alot. New faucets, fixtures, and appliances can do wonders, too. Above all, homeowners must focus on cost-effective, high-value-added projects.

You know my motto:Seek simplicity, comfort and value.

Be sure to download my free report, “Home Remodeling Success Secrets: Essential Tips Before You Buy, Sell, or Remodel a Home,” by filling in the opt-in box

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