Is The Housing Market In Recovery Mode?

You may not want to crack the cork on that Champagne bottle just yet. While the government insists that the housing market is recovering, other, more reliable sources, say otherwise. I have heard and read many stories professing that the housing market is turning around and that we don't have to worry about a double-dip in home values. I'm not convinced.

It is not my intention to be a doomsayer. Simply to be realistic. We can't fix it if we don't know what's broke. It's obvious that the housing market has been in trouble for several years now, but the government manipulating the data and spreading propaganda through the media regarding economic recovery, in general, and the housing market, specifically, only serves to make matters worse and delay true recovery.

The National Association of Realtors says sales of previously owned homes dropped 4.8% to 4.91 million units last year, the lowest level in 13 years. Many economists believe it will take years for home sales to rise to a normal level of around 6 million units a year. Some say home sales in 2011 will be even weaker than 2010 due to more foreclosures and home prices that are likely to keep falling through the first six months of the year.

The Commerce Department says new home sales for all 2010 totaled 321,000, the lowest level in 47 years. New home sales in 2010 dropped 14.4% from the 375,000 homes sold in 2009. It's the fifth consecutive year that sales have declined after hitting record highs for the five previous years during the housing boom. Economists say it could be years before new home sales hit a healthy rate of 600,000 units a year.

While these are national statistics, it is important to remember that California's real estate market was hit harder than most and that these statistics could easily be representative of California exclusively. The bottom-line is that it is going to continue to be a bumpy ride in the housing market during 2011, despite what the media says.

Interest rates are on the rise and purchasing a home now, before rates go up any higher, is still the right thing to do even if home values settle a little further because it may be a very long time before we see interest rates this low again.