Tuesday, March 9, 2010

Housing Market & Corn Farmers

People (You can't see me but I'm tipping my hat to you as if we were greeting each other).
Forbes came out with a pretty bold statement today "Here's a new sign that the housing market is in recovery mode: The number of homes for sale across the U.S. with discounted asking prices dipped to fewer than 20% on March 1". This is great news. But, once again, I think we need to dig a little deeper.
One reason there could be (Has not been verified) less discounts is that builders have caught up to the market prices. The new stuff on the market now has been built with the current market in mind. The builder who started building in '05 and finished in '07 was stuck with a $500,000 home that was only worth $350,000. He had to discount it in order to sell it. The builder who started building in '07 & '08 are building for $300,000 homes and do not have to discount them to get rid of them. Catch my drift?
The other reason they don't have to discount their homes is Uncle Sam is giving money (8000 big ones) to first time home buyers (Biggest portion of buyers out there). That's a built in discount. Kind of like subsidizing the corn farmers. Just grow it and the government will help you out (If I have offended any corn farmers out there I apologize. I didn't think you could read).
Again, this is good news. But let's not strike up the band just yet. There's a lot of corn to grow.
Tell me I'm full of it after you read the attached article (Click on the title).
God Bless.