The economy is starting to improve but the housing market has yet to show any significant signs of recovery, which has homeowners nervous. Home prices are hovering near their recession lows, hit in April 2009, according to the latest Case-Shiller home-price report. It’s a buyer’s market and by many projections, it won’t shift to a seller’s market for a good year or more.
So, how do homeowners, who have most of their equity in depressed real estate, slog through until it becomes a seller’s market?Here are 5 tips from real-estate moguls who have survived several housing-market downturns.
1. Homeowners should be very encouraged by the fact that home buyer sentiment has improved.
“The mood has definitely changed … Buyers are feeling more positive,” said Barbara Corcoran, the founder and former president of the Corcoran Group and a real-estate pro who has survived four housing-market slumps. “The activity level has jumped considerably in the last 60 days … over and above the typical spring market,” she said.
Rents have been soaring and it’s now cheaper to buy than rent pretty much anywhere you go, Corcoran pointed out, which will only add fuel to home-buyer desire.
2. Builders aren’t building many new homes, which means less competition.
Housing starts have been flat for the past year, according to data from the Commerce Department, which means that homeowners won’t really have to worry about competing with new construction when they go to sell their homes.
“You’re seeing a lot less inventory on the market while at the same time, there are more buyers in the market,” said R. Donahue Peebles, chairman and CEO of the Peebles Corporation, which has a $4 billion portfolio that includes properties in Miami, Las Vegas and Washington, D.C.
3. In about 40 percent of major metropolitan cities, home prices are going up, according to the National Association of Realtors.
Low interest rates have been tough on savers, since saved money isn’t making as much interest, but they help drive up housing prices, Corcoran noted.
4. Remember: Your house may be worth less on paper, but you won’t lose any money unless you sell.
This is one thing homeowners often forget when they get caught up in the latest headlines about home prices or checking on the value of their own home: If you don’t need to sell right now — don’t.
Corcoran said she owns a country house that she’s not living in, but she plans to hang onto it until the market recovers. “I can’t bear to let it go for 50 percent of what I could have five years ago.”
5. Slumps feel like they go on forever, but the recoveries can happen quickly.
“Prices are always slow to unwind. And the time feels much longer than it actually is,” Corcoran said. “But when they recover, they recover like gangbusters — and you can make up a lot of appreciation in a short amount of time,” she said.
No one is suggesting this will be a “gangbusters” recovery, Corcoran clarified, but it will probably happen more quickly than most people think.
“I think people are grossly overestimating how long it’s going to take,” Corcoran said. Previous price recoveries have happened in quadruple- or triple-time, she said. “Maybe now it’s double,” she added.