We are hearing this question non stop in today's financial media. Warren Buffet says he'd buy a hundred thousand single family houses. Donald Trump says "don't know what to do? - go buy a house!". Even Robert Shiller of the industry standard Case - Shiller report says it probably would not be a mistake to buy now.
So what does Diana Olick say? For once, Ms. Olick and I are far apart with our opinions. Diana declares (and rightly so) that real estate is a local business. However, she then states that the middle price range ($250,000 to $500,000) may be poised for big action. Citing historic interest rates and the debatable fact that the housing market has bottomed, Ms. Olick seems to have succumbed to the mass hysteria of economic optimism, particularly as regards to housing.
I feel quite the opposite. It is my opinion that the economy, and hence consumers, are still too fragile, and therefore unable to buy for some time to come. Even with the slight relaxation of underwriting standards, the truly "organic" buyer (non investor, non all cash buyer) is not ready to move. Possibly trapped in an upside down property already, or just not able to qualify for a home that would be worth jumping through dozens of flaming hoops, the desire is not there.
Folks have been calling the bottom and rushing back into the market for 3 years, only to see more equity and capital go up in smoke in a continuing decline of values.
Of course, the credibility of these optimistic experts is hard to argue. However, I am reminded of a saying my mother used on me for years when I was a child. "Just because your friend Donnie jumped off the bridge, should you?" No mom, I guess not...
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