Housing prices have apparently bottomed, although the climb ahead will be both steep and long. Accordingly, that presents the market participants with an interesting pair of questions.
Q - Is it a good time to buy?
A - Yes, and it likely will be continue to be a buyer's market for a long time to come.
Q - Is it a good time to sell?
A - No, and it's not likely to be a seller's market for a very long time to come.
Seller's Remorse Hinders Housing Market has the "getting better but not good" story for prospective sellers:
"It's a great time to buy a home. Selling a home? That's a different matter.
The combination of the sharp decline in home prices since the housing
bust and record-low mortgage rates have brought housing-affordability
indexes to record highs. And with rents rising, home price-to-rent
ratios—the housing equivalent of a price-to-earnings ratio for
stocks—are at their lowest levels in more than a decade.
Small wonder, then, that when
households polled for the Thomson Reuters/University of Michigan's
survey of consumers in August were asked whether it was a good time to
buy a home, most said yes. That left an index based on their responses
near its highest levels since 2004.
Households were also asked whether they thought it was a good time to
sell a home, and there the response was very different, with most
people saying no. While the Michigan index of home-selling conditions
has made a little progress, it remains severely depressed.
Indeed, sellers' lack of enthusiasm is a big part of why real-estate
agents have been complaining about a lack of inventory lately. The
obvious outcome is higher prices. And that looks likely in those areas
where buyers are starting to line up but sellers remain on the
Against that backdrop, it is hard to see why the Federal Reserve
needs another round of quantitative easing to try to push mortgage rates
even lower. Not least because having people lock into such low rates
could cause problems if rates ever normalize down the line and people
don't want to give up their supercheap, fixed-rate mortgages. But the
Fed is likely to see that as a problem for another day."
The signs are clear that the worst is over for housing. That's good.
But since housing prices nationally fell by roughly one third since ~2006, that means they'll have to increase by 50% just to get back to those levels.
Sellers who bought at or near the peak may have a very long wait if they're expecting to get back to break even levels before selling.
In any event, that's the bad news, good news updated story on housing. The good news is it's a good time to buy. Meanwhile, the bad news, at least for sellers, is that it's not likely to be a good time to sell anytime soon.
The housing bust has ended, and there's exactly zero reason to forecast a new boom in the next several years.