Is the Glass Half Empty or Half Full?


“No End Yet for Downturn in Housing, New Data Suggest”-This is the headline of an article published by the New York Times this morning. The article suggests that the twin signals of decreased new construction and increased foreclosures signal further trouble in housing. In my opinion, the writers may have the data right but their analysis is all wrong. Everyone knows that there is currently excess inventory in many housing markets. Until this inventory is cleared, prices will not be able to go back up. Increased new construction would only prolong the pain. In terms of foreclosures, what the article mentions half way down is that “cheap, plentiful houses and lower mortgage rates have drawn buyers back to the market, and an industry group says homes are more affordable than ever before.” Once again, the glass is either half empty or half full, depending on your situation. If you are a first time buyer who can finally afford to buy a home and get arecord low 30-year fixed interest rate,your glass is half full. If you speculated that the investment home you bought at pre-construction prices would double invalueby the time it was complete, your glass may be more than half empty.

In Park City, the market where I work, we are seeing a massive decrease in new construction and more short sales and foreclosures, although distressed properties still make up a smallsegment of our market. We are seeing incredible opportunities for buyers. Sellers who have owned property for 4 or more years are seeing nice profits on their real estate investments. I realize the New York Times in the business of selling newspapers, but this type of sensationalized reporting creates stress and panic instead of an understanding of market forces.

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