Where is the Real Estate Tipping Point?

I loved the book “Tipping Point” which speaks to a pivotal moment or event that will dramatically shift the course of a trend or behavior. For real estate, the tipping point was certainly the meltdown of the stock market and banking institutions resulting in loss of confidence and loss of jobs and investment nest eggs. The loss of confidence I think is still at the core of the issue. Buyers are not confident that they will continue to be employed or that their stocks or home will be good investments for the future. Of course, the fact that almost everyone had irresponsibly accumulated credit card debt is undeniable, and as those debts are reduced by paying them off or spending control, confidence in one’s own ability to manage money will return. The obvious indicators to look at to foresee a turnaround would be increased employment rates and improved home values and stock performance.
There are some other interesting trends contributing to the low volume of home sales. One is that the white-collar jobs are being reduced and these buyers were the “bread and butter” of a healthy market. Now we see first-time homebuyers, especially returning Veterans and higher end professionals but that range of $300,000 – 500,000 is like a never, never land recently.
Another factor of interest is the fact that home formation is way down. That would be people moving in together to buy a home and establish a home or family. Another indicator I follow is retail sales which was up this last week and even auto sales are up. Could a home purchase be next? I am hoping so because mortgage rates are at rock bottom so the opportunity is a once in a lifetime one.
What will be the tipping point to get people back into the housing market? I wish I could predict that and in fact what we may see is a slow turn of this Recession Ship as confidence returns to American homebuyers.