Property Management Blog

Will the Housing Market Come Back Anytime Soon?

by Tom Lutzenberger on Saturday, June 30, 2012 7:31 AM
The last time the real estate market in the U.S. was in its heyday was in 2007. From that point forward, the market went into a slow and then increasingly fast downturn. By 2008 it was a death spiral as many knew at the time and others found out later with rising mortgages and foreclosures.

It’s been four years now since the mortgage-backed securities crisis decimated Wall Street and the lending markets froze. Many are still underwater with loans owed still at balances far more than the homes financed are worth currently. Available home sale markets are also glutted with foreclosure inventory, with far more units still be held back by banks unless the prices drop even further with so much supply suddenly available. Finally, banks are still being very strict what those loans they are willing to approve, generally providing the funding to those who almost don’t need the funds at all to buy a home.

So when will the real estate market actually improve? Believe it or not, the market may actually be showing signs of stabilizing in 2012. While there is still a tremendous amount of inventory still on the books that needs to be unloaded by banks in terms of foreclosures, the key elements may finally be in place for a turnaround.

Labor Seems to Have Stopped Bleeding, Maybe

One of the major drivers of home-buying is employment. Regardless of how many homes are built, sold, or marketed, the key driver that allows all of the sales activity to occur is the ability for people to earn money on a regular basis to pay their bills, save, and buy homes.

From 2008 to 2009 many states saw a marked increase in unemployment as companies continues to streamline off jobs to stay alive financially. This raised the overall national unemployment rate to as much as 14 percent in some states and average 9 to 10 percent in many states. Since 2009, which seems to have been the peak of the losses, the job market has returned slowly. However, the recovery is weak in 2011 and showing signs of losing ground a bit in 2012 again (

Much of the increase in job loss again is not on the private side now, but rather from positions being eliminated in government. Public agencies generally tend to follow the woes of the private side two to three years later. So it’s only natural as the loss of taxes in property, payroll, and income have finally hit home, causing many states and local governments to go deep into the red. This in turn creates more pink slips which has driven the job loss numbers up again in 2012, especially in government-heavy states and regions.

Because proof of personal solvency is necessary for home-buying, until the job market truly improves, home-buying will putter as well as bank-lending. Given that 2012 is a Presidential election year, real estate markets are not likely to see major improvements for jobs until a new president is chosen in November. Until then, companies will hold their best to see what kind of government they will be dealing with for the next four years.

Housing Starts Up

Spring 2012 saw a noted increase in housing starts and sales number, however, producing figures not seen since 2007 in a number of hard-hit states. Two major factors have been huge helpers, despite banks still being leery at lending. These include low selling prices as well as mortgage rates being their lowest in 60 years. Both have attracted new buyers into real estate unsaddled with bad credit or borrowing problems as well as those ready to buy again.

Because real estate is finally beginning to move again, many are hoping this means the return of normal markets. That said, there’s a long ways to go. A normal national market would see at least 6 million units being sold in a year. So far, 2011 saw 4.4 million homes sold. However, the trend has been on an upward direction since 2010, which all experts are taking as a good sign.


The market will eventually return as buying demand evens out with supply. One has to keep in mind the banks still hold back a good number of homes that they need to eventually sell off. However, that too will occur with time. The hard part for many homeowners wanting to see their home values go up again is the waiting. Assuming nothing goes sour with the economy again, it will likely take another five years for the market to shake off its inventory and become healthy again. This assumes also that the job market will return and produce more buyers as well.

In the meantime, where properties have to be vacant, owners should consider earning income on them via property management companies. Renting can definitely offset property costs such as maintenance and property tax. This reduces the expense on a home property investment until value returns again. With a good property management company a regular-paying tenant can be secured, providing a steady revenue stream to ride out the wait until a good real estate market returns.


The U.S. real estate market is in a fragile place right now. If the 2012 Presidential election causes another economic downturn, the general economy could be depressed again similar to what happened in 2001-02. Further, despite affordable pricing and great mortgage rates, banks are still keeping a leash on the market by keeping lending severely restricted. On the other hand, if left alone, the real estate market could potentially restore itself.

Everyone wants the market to improve, and it is showing a sustained improvement since 2010, but there is a long way for it to go before becoming truly “healthy.” Rather than stewing on property values moving slightly every month, property management offers a financial alternative for homeowners to get some money back in the meantime. It’s an option worth considering if property is sitting idle rather than being lived in.

Copyright ©2012

Tom Lutzenberger

Tom Lutzenberger on Property Management and Real Estate

Thank you for reading my blog where I discuss the latest topics, trends and legal aspects of property management and real estate.

2 comment(s) so far...

Anonymous 9/1/2012

I love the look of your website. I recently built mine and I was looking for some design ideas and you gave me a few. May I ask you whether you developed the website by youself?

Anonymous 9/2/2012

I can answer that question very succinctly. No.It will take at least a decade, from 2012, with the state of national & international affairs to become strong enough to support anything like the sort of market position that existing in 2007. on Google+   Property Management Direct on Facebook  Property Management Direct on Twitter Property Management Direct on YouTube   Property Management Direct on LinkedIn