Is it just me, or is David Learah, about the most two sided talker on the planet? He is all over the map here, trying to reassure folks it's all OK on one hand, but you better cut prices on the other? What is it Dave? His pronouncements are so peculiar that maybe the press is just having fun with him at this stage?
Economist: Housing market has to cool off
Effect on Delaware will be slight, he says
By MAUREEN MILFORD, The News Journal
Posted Thursday, October 5, 2006
David A. Lereah of the National Association of Realtors said Delaware will recover quickly from any downturn.
The softening of the nation's housing market is unlike any downturn seen in the past 50 years, one of nation's top housing economists told a group of Delaware real estate agents and mortgage loan officers Wednesday.
In previous falloffs, the weakening was caused by underlying economic fundamentals, including job losses, rising interest rates and stagnating wages, said David A. Lereah, chief economist of the National Association of Realtors, a trade association representing 1.3 million people in the real estate industry.
Today, the fundamentals are solid. The downturn is caused by falling confidence among buyers who are fearful of paying too much.
"Buyers are just not buying," Lereah told a group of 200 people from Gilpin Mortgage Co. and Patterson-Schwartz & Associates Inc., a real estate services company. Lereah made his remarks at the Center on the Riverfront in Wilmington.
Lereah expects sales of existing homes nationally to decline 10 percent in 2006 from the previous year, while new home sales could fall by as much as 16 percent to 17 percent.
As a result, the five-year seller's market is transitioning to a buyer's market. This means home sellers will have to be less aggressive on pricing, he said. If sellers revise their expectations, the buyers will return and home sales will rebound, he said.
"We need to have a correction. Prices need to come down," Lereah said.
Sellers in many markets across the country have backed off on the double-digit price increases that were standard from 2000 to 2005, he said. Lereah expects price appreciation in 2006 will total a modest 2 percent for existing homes -- below the rate of inflation. New home price appreciation will be flat, Lereah predicts. While the nation's housing industry has not seen annual negative price appreciation since the Great Depression in the 1930s, some individual markets could see declines of 10 percent to 20 percent. Particularly vulnerable are resort markets on the nation's East and West coasts, he said.
"Prices are finally coming down and that's good news," he said.
While some pockets in Delaware will see some decline in home prices, the state's housing market will not be affected as much as other parts of the country that had explosive price increases. Las Vegas, for example, saw an annual appreciation of 52 percent, he said.
What's more, areas in Delaware that do see some downward adjustment will recover faster than other parts of the country, he said.
Richard T. Christopher, chief executive of Patterson-Schwartz, agreed. Delaware traditionally has been a stable market that doesn't experience wide swings, he said.
Christopher expects price appreciation will be cut in half. If a neighborhood was seeing price increases of 12 percent, that could fall to 6 percent, he said.
The median price of a home sold in New Castle County during August was $240,000, up 6 percent from August 2005. In Kent County, the median price rose 8 percent in August to $235,000 from August 2005. Patterson-Schwartz does not collect data from Sussex County.
Ann Riley, president of Gilpin Mortgage, also sees a soft landing after an incredible five-year run.
"We're now seeing things stabilize," she said. |
