Pricing Trough – How long will it last?

Here in the metro Columbus, Ohio housing marketplace we have been in a decline since around 2004 when we noticed the number of Buyer-Clients we were helping each year began to contract.  So we’ve actually seen a company wide reduction in the number of Buyer-Clients which we think hit bottom in 2008.

It’s interesting that the Ohio Association of Realtors reports that our 2008 sales volumn is “just as good” as 2001.  While the sales volumn statewide is at the same levels as 2001 what they don’t mention is that a portion of these “sales” are distressed – either foreclosed properties, short sale properties (where the seller owes more than the home can be sold for and the lender is “willing” to take less for the payoff) or distressed sellers who have enough equity to sell for much less than normal.

What’s interesting is that once these bank owned, short sale and squeezed sellers get re-purchased (snapped up) by new owners then the market will slowly begin to switch to slowly appreciating property values.  I testified last Summer to the New Albany Board of Education that this trough will last at least until the Spring of 2011.  In my professional opinion that is when we should see these bottom deals fully absorbed and actual suppy and demand equalizing since the 2002/03 era.

Of course it goes without saying that governmental intrusion will only delay this “self correcting” market.  And who knows when they will finish tinkering with the housing market!

The last think builders should do is begin building again.  Sit tight and wait.  They only further the delay if they begin to crank out the single family homes again… but that’s another post!