Despite all my flowery optimism in the last Realty Bites, in which I hailed 2010 as a year of good prospects for the market and hope for all, the year began with lots of negative news for aught-ten. I’d like to say I’ve never been wrong (I said I would “like” to say that). But I still think the year will be far better than 2009, and that property will again be viewed by the majority as a good investment sometime in the next 12 months—and this will be ever truer for embattled markets like Long Beach, which again will be recognized as affordable oceanside communities.
The most downward looking, and probably the first piece of bad news, about real estate came during the first day of the new year from CNNMoney.com in an article titled “3 reasons home prices are still heading lower.” Despite prices rising more than 3% since May, a forecast cited in the story states that prices will fall across a broad-spectrum of markets with an average drop of 11.3%. And the three reasons for the expected drops? “A coming flood of foreclosures, rising interest rates and the eventual end of the tax credits,” the story states.
The National Association or Realtors, which fought successfully for the first-time buyer tax credit, and to have it expanded and extended, usually has a bit more optimistic view. The group is due to release its Pending Home Sales Index today, which usually makes a lot of waves in real estate news the day the report is issued.
Another dose of optimism comes from an LA Times blog, which reports that although there may be some more ugly news earmarked for commercial real estate, “it won’t be bad enough to bring down the economy.” The blog sources Bob Bach, chief economist with Grubb & Ellis. “Many have called commercial real estate ‘the next shoe to drop,’ but that’s really an exaggeration,” Bach said. “It implies that commercial real estate could wreak damage on the financial system equivalent to the subprime residential mortgage losses, which is highly unlikely because the value of outstanding commercial mortgages is a fraction of the value of outstanding residential mortgages.”
That statement counters many worrisome reports on commercial real estate, like a story in Business Week that quotes John Ryding, chief economist at RDQ Economics in New York, as saying on Bloomberg Radio, “We have yet to see the full extent of those problems.” The newswires have been full of reports with people’s take on the bloodletting set to occur soon in the commercial real estate sector. When I wrote full-time about commercial real estate, it was a struggle to find good news to print in the mounds of negative news that piled up on my editor’s desk each day. I had once written the word “default” so many times in one story that I spent over two hours finding ways to write around it or come up with good synonyms. I can’t tell you how many times I almost used words like “indigence,” “pauperism,” and “ruination” instead. Still, let’s hope Bach’s more positive view on the commercial market holds the truest (or at least the truer) of all the views out there.
And speaking of real estate in Long Beach, on which I and the editors of the lbpost.com like me to focus, I’d like to invite Realtors or people in the industry out there with unique properties or interesting trends in mind to contact me at [email protected] and I will possibly write up, or even video, some of your listings or interview you on your thoughts on local, regional, statewide or national trends.