The Real Estate Love Affair Continues?

I always look for a silver lining.  Despite all the news about the real estate slump, housing bubble bursting, etc., I’m still optimistic about the housing market.  While we’re seeing an adjustment in Connecticut, one that’s long overdue, I think it’s a correction and nothing more.  The correction will shake the low hanging fruit from the tree – real estate speculators and people who over-extended themselves with 100% financing and who find themselves having to sell before the market is done adjusting.

So, when I saw this article in the Wall Street Journal, Generation X May Boost Sagging Real Estate Market, it brought a smile to my face. 

The housing market may be in a slump, but the industry’s long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver.

Real estate is a good investment, if you can hold onto it.  One of the participants issued caution, which I think is sound advice in any market. 

“You’re better off renting unless you’re going to be in a home for at least five years because of the costs of getting in and out,” (Ron Terwilliger, chief executive of Trammell Crow Residential) told attendees.

In reaction to the otherwise sour news about the real estate market, the National Association of Realtors has begun an ad campaign to try to convince consumers that “It’s a Great Time to Buy or Sell a Home.”  The Matrix has a good analysis of this ad and its goal.  The Real Estate Guide’s post, It’s a Market Stupid, also offers some good comments.

While I don’t think NAR is desperate, I think it’s clear who they serve -realtors.  They are not a consumer advocacy group.  They want you to buy a house and then sell it in a few years to keep all the agents and brokers busy and membership revenue coming in. 

With that said, the ad does make a few points that are valid, if self-serving.  Interest rates are low.  Housing inventories are high.  The outlook from economists is largely positive. 

I don’t agree that housing inventories are going to decrease any time soon – it will take time.  And if the Democrats raise taxes like they said they wouldn’t before the election and are now saying they’re going to (only for the wealthiest Americans, which includes anyone who can afford a house!), then that inventory may be around for a little longer because we’ll have less discretionary dollars.