Charlottesville Foreclosure Projections

Charlottesville Foreclosure Projections

If the majority of Wall Street economists are right, the U.S. recession will end this quarter and the global recovery won't be far behind. And our window of opportunity for once in a lifetime deals is here, but not for long. (Read on below.)

On Wednesday, the International Monetary Fund is expected to nudge up its forecast for 2010 global growth from the current estimate of 1.9 percent, primarily because fears of a more serious economic setback have not materialized.

That makes for a brighter backdrop to this week's meeting of leaders from the Group of Eight major industrial nations in Italy, where the economic outlook is top of the agenda.

As you have noticed lately in the skittishness of the stock market, recovery will not be a smooth process. As Bank of America Securities economist, Drew Matus, put it, this quarter marks a "new beginning with some nagging reminders of the past."

First, the good news.

1. The U.S. housing slump appears to be near an end after 3-1/2 years of decline. That, combined with a strong stock market performance in the second quarter, should stop the bleeding in household wealth. (Read more about housing bottom news here.)

2. Government stimulus money is flowing in the United States and other major economies including Japan, China and Germany.

3. Global manufacturing surveys show output expanding after a year-long period of contraction. In the United States, the pace of new orders is improving while inventories keep shrinking, so production may need to pick up soon to meet demand.

4. Figures due on Thursday are expected to provide a good illustration of that. Economists polled by Reuters think U.S. wholesale inventories dropped 1.1 percent in May, while sales were flat.

Those are among the reasons why Matus recently raised his U.S. economic outlook to show an above-consensus 2.7 percent jump in 2009 gross domestic product.

Now for the bad news.

1. Wednesday's report on U.S. consumer credit bears close watching for more evidence that Americans are paring their credit card debt as banks clamp down on lending and consumers rethink attitudes toward borrowing and spending.

2. Job losses are likely to keep piling up at least through the end of the year. Last week's disappointingly weak June employment report served as a reminder of that. The data showed employers cut a net 467,000 positions last month, far more than expected and considerably more than in May.

The White House expects unemployment to climb to 10 percent in the next two to three months, far higher than it envisioned back in January when it was pushing for its $787 billion economic stimulus package.

"The heavy loss of jobs in June is a warning that the road to recovery will be bumpy, but doesn't yet indicate that we have gone off the track," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

If there is a bright side to stubbornly high unemployment, it would be that it helps keep inflation at bay even after the recovery gets going.

That takes some of the heat off the U.S. Federal Reserve and its central bank counterparts in Europe and Japan to raise interest rates once the recovery begins.

Those low rates and even lower home prices are making affordability at levels not seen since the 1970s.

It's absolutely time for you to buy below todays already low prices, from very motivated sellers, and then quickly sell and put profits in your bank today. This window of opportunity is here now, but it is hard to say for how long.

All the key indicators show how Charlottesville housing is not only stabilizing, but improving.

Just today the Pending Charlottesville home sales show a sustained upward trend, rising for the fourth month in a row, from our very favorable housing affordability and a first-time buyer tax credit boosting activity.

The Pending Charlottesville Home Sales Index based on contracts signed in May, increased 0.1 percent from an upwardly revised reading in April, and is 6.7 percent higher than May 2008.

The last time there were four consecutive monthly gains was in October 2004.

Wow, the Charlottesville real estate market is really heating up.

And if you haven't already jumped in to get your Charlottesville foreclosure deals, you need to do that NOW.

Regional Breakdown:

Northeast rose 3.1 percent May over April and is 6.8 percent above May 2008.

Midwest slipped 1.3 percent May over April, but is 11.4 percent above May 2008.

South declined 1.7 percent May over April, but is 7.9 percent higher than May 2008.

West rose 2.2 percent May over Apri, and is 0.7 percent above May 2008.

NAR’s Housing Affordability Index remains at historic highs.

The affordability index fell to 171.6 in May from an upwardly revised 178.8 in April, which was the highest on record dating back to 1970.

“Under these conditions the typical family would devote only 14.6 percent of gross income to mortgage principal and interest, which is one of the lowest percentages on record,” NAAR's chief economist, Yun said.

A median-income family, earning $60,800, could afford a home costing $296,700 in May with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest.

Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of what a median-income family can afford.

The affordable price was significantly higher than the median existing Charlottesville single-family home price in May, which was $172,900.

The first-time buyer tax credit also is benefiting the market.

“Strong activity by entry level Charlottesville home buyers is helping to absorb inventory and allow some existing owners to make a trade,” Yun said.

Pending home sales is a forward looking report.
Therefore you should see existing-home sales continue to trend up through the rest of the year. Even with all the new Charlottesville foreclosures hitting the market, with builders not building, supply is shrinking.

In some parts of the country, like California, housing supply is less than a 4 month supply.

That is great news for us, as you will see multiple offers when you price your houses right on the resale.

And at the same time, there is a ton of inventory from the banks that has NOT hit the market, but they own it and need to sell it.

That is what we call "phantom inventory" and you absolutely want to work those leads for bottom picking deals.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
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