Evidently the housing market isn’t improving quite as quickly as the initial numbers for existing home sales in November led people to believe. First we found out that new home sales had dropped off more than anticipated, although with competition from foreclosed homes some economists expected a slight drop off. Now the numbers for November sales contracts have been released, and there is a 16 percent drop off from the previous month.
This is the type of economic news that can be spun several different ways, depending on who is writing the article. The National Association of Realtors is saying that this was to be expected, that once people found out the tax credit for first time home buyers had been extended until April, people were going to take their time before they decided on a home to purchase. They point out that the numbers are still better than a year ago, and that they should rebound further in the spring. Economists not a part of the housing or real estate industries are not as optimistic. Some feel that the industries are being propped up by the federal government, and that when the programs holding down interest rates end in March, and the tax credits end in April, the industries will fall back to where they were when the housing bubble first burst. Some economists even predict that homes will continue to lose value in some markets. I read the other day that new homes are being built on a pace now that is about the same as they were in 1971. That’s a long time ago. As someone who worked in the industry for over 25 years, I personally believe the new home market will not get back to any semblance of normal for a very long time.
What does all of this mean to enthusiasts of old houses? Those of us who already own our old house, and plan to keep it a long time, are not really affected, in my opinion. Its sort of the same as when the stock market goes down drastically, as long as you don’t panic and sell, and you hang in there, usually it will all work out. Our old houses may have gone down in value, but eventually it may return, at least to a degree. Most of us don’t have old houses as an investment anyway, speaking for myself, I have an old house because I wanted one as a home.
Those people seeking to purchase an old house should be in good shape, at least until interest rates begin to rise. Even then they will need to rise quite a bit before they offset the great deals that are available now in the real estate market. Anyone seeking to sell an old house should make sure it is priced to sell. If what some economists predict actually happens, and rates start to go up and housing values down, you may be better off already having your old house sold.