The Case-Shiller Home Price Index, released September 30th, had home prices up in 18 of 20 metropolitan markets. Many real estate experts are using this data to promote the idea that the housing market is recovering. For example, in Tom Brown’s recent article on Seeking Alpha, ‘Case-Shiller’s Recent Strength: It’s Not Just Seasonality’ he claims that “The evidence is growing that the long slide in home prices is at last coming to an end. For months, skeptics have dismissed recent price strength as merely the product of the calendar. Now, it seems, they’ll have to dismiss it all some other way.”
On the other hand, the doomsayers out there believe that this so-called recovery is just pie in the sky. These analysts believe that the federal government is propping up home prices with the $8,000 tax incentive, scheduled to expire on November 30th. This deadline will be extended and the incentive may be increased, as reported by the New York Times article, Congress Poised to Keep Homebuyers' Tax Credit, on November 3rd.
So who is a professional real estate investor to believe? First of all, don’t get me started with the whole concept of a national housing market. There is no such thing. Real Estate is a local business. I personally know a handful of investors that have been making money in markets such as Ohio, Texas and Arizona for the past 24 months. Not one of them could care less about the Case-Shiller index, or any other index for that matter and neither should you.
Admittedly, I just got back into the game a few months ago after stumbling around in the dark for the past few years. However, as slow as I can be at times (remember my lunch story?) it didn’t take me long to find three major real estate recovery roadblocks. I will take time to discuss each over the next couple of days. I bet the waiting will absolutely kill you. So I’ll give you the bullet points now and expand on each of them over the next few days. Here they are in no particular order:
- The Appraisal Process
- The FHA 90-Day Seasoning Requirement
- Banks that move like glaciers and their new business partner, Uncle Sam.