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Economist tells Silicon Valley Realtors the worst is over (edit/delete)

Lawrence Yun, the National Association of Realtors chief economist and senior vice president of research addressed a speach at last week's annual membership meeting of the Silicon Valley Association of Realtors, he believes "the worst in [home] sales is clearly over."

He said the "Californis'a real estate market recovered even before the home buyers tax credit." and he added that "The tax credits boosted sales even more. It will take time, but the market is slowly recovering. Prices are back in line with historical norms, and the only things holding back a full recovery are the job situation and psychological outlook."

He said:"We need job creation. If business spending increases, the economy would be more robust," Yun said.

Yun also worries about housing starts. If building does not keep pace with a growing population, Yun predicts a serious housing shortage. He said in the Bay Area alone, 30,000 housing units need to be produced--a far cry from last year's 3,000 units.

Yun's message: Those with strong credit who can buy, should buy, while mortgage interest rates are still at a 50-year low. Things could change very quickly, especially if inflation creeps in.

"I don't expect rates to remain low. They may increase next year," he said. "If you're willing to stay well within a budget and are comfortable with it, at a 4.4 mortgage interest rate you're protected under inflation."

Distressed sales, unfortunately, will remain a fixture in the market for at least two more years, according to Yun. He said the banks' axiom is, "All bad lending occurs in good times." Many of the distressed sales are a result of loans made during the housing boom. He hopes with the foreclosure moratorium banks will understand negotiating short sales would be a better option than foreclosures.

I have to agree with his point of "the worst is over". I saw last year a Newer (15 years old) Mountain View single family home was sold $700,000. This year the same complex and similar homes are sold for $840K to 800K and the newest listing is asking $828K. If the short sales and foreclosures homes are over 50% on the market homes for sale then it will take much longer for the market to recover such as south and east San Jose. Yes! I do like to see new jobs to fuel the local economics.