Many forecasts for the housing sector paint a picture of continuing price declines, rising foreclosure numbers, and a looming ‘shadow inventory’ that could stop recovery dead in its tracks, but Radar Logic says predictions of a second doomsday collapse are “exaggerated.” The New York-based real estate data and analytics firm argues that housing demand is currently strong, with home sales outperforming historical trends for this time of year. This leads Radar Logic to believe that low home prices, coupled with government incentives such as the homebuyer tax credit, will keep demand strong well into next year. www.TheLaJollaLife.com




Even after unemployment peaks, perhaps in the second or third quarter, the company says increased stability in household incomes will provide further support to housing demand. Regarding that ominous supply of distressed properties lurking in the shadows, Radar Logic says it will enter the housing market at a controlled rate that can be absorbed by existing demand without drastically reducing prices.

Thanks to bailout money and a general improvement in their financial health, banks no longer have an urgent need to liquidate their assets, Radar Logic says, and as a result, lenders and government entities like Fannie Mae and Freddie Mac are able to curtail sales to stabilize prices and avoid recording losses on properties. “Bankers and mortgage investors are rational and will not foreclose on and liquidate the pipeline of distressed properties in a manner that would depress the value of the properties they are trying to sell,” said Quinn Eddins, Radar Logic’s director of research.

Eddins noted that the administration sees stability in the housing market as crucial to economic recovery and has committed to help mitigate foreclosures well into next year, which will help to contain the supply of distressed homes. “If efforts to ease foreclosures can and do succeed, there could be significant recovery in housing values in 2010,” added Michael Feder, president and CEO of Radar Logic. “Inventories are close to the norm of six months’ supply and prices have returned to 2003/2004 levels. Activity is much stronger than normal for this time of year, and there is evidence of qualified buyers waiting on the sidelines.” All this means that “it may well be time for housing values to go up,” Feder said. Radar Logic’s October 2009 RPX Monthly Housing Market Report shows a decline in residential prices of only 0.7 percent during the month ending October 15 – the smallest drop for that time period since 2005.

Three- and six-month trends in the company’s composite price index were also stronger than they have been in four years. Prices increased month-over-month in 11 of the 25 metropolitan statistical areas tracked by Radar Logic, mostly in the West Coast and Southeast regions, where seasonal factors are less prominent than in other parts of the country.