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Two-Speed Housing Market

03/18/2012

A good friend of mine faithfully forwards each issue of The Kiplinger Lettter which I have studied for many decades now.  I like this newsletter because it is clear, concise, and non-partisan.

The current issue is unusually interesting.  Even though the average price of homes is expected to drop another 2% nationally this year, home prices have already been on the rise for a year in 38 states.  There are five states that are pulling down the national average.  Those states are Arizona, California, Florida, Michigan, and Nevada.

The common denominator for those five states is that they all use “judicial review” before a home can be foreclosed.  As a result, there is a huge over-hang of properties to be foreclosed and to be dumped on the market.  This depresses the market and prevents the free market from operating to clear the over-hang.

That is another “green shoot” of good news for the home market!  It is time to tell your kids to go buy their own home and to get out of your home!

Of course, I just received my annual notice from the City Assessor that my home lost almost 9% of its value last year.  Since this decreases my real estate taxes, I was privately told by a City Councilman that an increase in tax rates is coming soon.  Does that mean the tax rate will go down next year when my home starts increasing in value again?

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