Thanksgiving has passed and many people are recovering from their feast with friends and family, as well as a blitz of shopping and football.
This holiday season, for many consumers something that may be more fulfilling than leftover turkey and their shot at landing a Black Friday or Cyber Monday prize is a housing market that has been a treat from coast-to-coast.
Lane Hornung, CEO and Founder of 8z Real Estate discusses with John Rebchook of InsideRealEstateNews.com, some of the housing-related issues that home buyers, home sellers and consumers in general can be thankful for this holiday season.
John: Lane, as far as things to be thankful for this year, how about those interest rates?
Lane: That’s a good starting point. It would be easy to take low-interest rates for granted because they have been low for so long. It’s the gift that keeps on giving. To think you can lock in money this cheap for 30 years. It borders on crazy!
John: Historically low rates are not just good for buyers, are they?
Lane: It’s also great news for someone who plans to live in their home for a while and can refinance. A refi can save them a lot of money and maybe even allow them to stay in their home if they are struggling financially or under water.
John: The immediate savings from refinancing can make a big difference for a lot of people, but also for the overall economy, right?
Lane: It’s like getting a tax-free raise. The benefits can flow beyond the savings to the homeowner. It frees up more money they can spend on things other than housing, potentially giving a boost to our consumer driven economy.
John: On to another topic. The shadow market. Last year, many observers opined that 2012 would be the year that banks dropped an unprecedented number of distressed homes on the market, depressing prices and stopping the housing recovery in its tracks.
Lane: It didn’t happen. In fact, we could use a little more shadow inventory right now. The supply of homes for sale is so low.
John: Do you think the shadow market is lurking in the wings, waiting to envelop the market?
Lane: It’s not going to happen. Yes, it takes a certain amount of time for banks to process foreclosures and short sales and get them on the market. However, the banks know that anything they put on the market right now will get snapped up quickly, so they are getting their distressed properties to market as quickly as they can. We’re not going to see a flood of shadow inventory homes hit the market all at once, depressing prices by 15 percent or 20 percent. The market is strong enough to digest any envisioned increase in the supply of distressed shadow inventory. The number of foreclosures has peaked and is declining.
John: There was also a fear in early 2012 that the worst wasn’t over and any recovery was a head fake.
Lane: We didn’t have the dreaded double-dip that many feared. That is, we didn’t hit new lows in prices. We came close in the Spring, but it didn’t happen.
John: Now, prices are rising.
Lane: Probably the single most important thing to be thankful for in 2012 is some honest-to-goodness appreciation. We are starting to see some significant appreciation. That means more people will be able to sell their homes, and others who want to stay put can refinance. We not only hit bottom, but the housing market is clearly rising.
John: When the recovery began, it was not evenly distributed. Most of the action was taken place at the lower end of the housing food chain, while recently we’ve seen luxury home sales showing the biggest percentage gains in many cities. What does that say about the market?
Lane: Consumers can be very thankful that homes in all segments of the market are selling. It’s not just the lower end. That is very healthy and bodes well for the future.
John: Finally, since the housing recession began, some people feared that we would become a renter nation and that owning a home would no longer be a goal for young Americans. What do you see happening with the so-called Millennials, a generation bigger than the Baby Boomers?
Lane: Millennials have not given up the dream of home ownership. The American Dream is alive and well with them. That is something we can all be thankful for, not only today, but also for the future.
John: Thanks, Lane.
8z Real Estate is a sponsor of InsideRealEstateNews.com. A question and answer with Lane Hornung is a monthly feature of InsideRealestateNews.com. If you have any topics you would like Lane to address, contact John Rebchook at JRCHOOK@gmail.com. To learn more about Hornung’s company please visit 8z Real Estate