Michael Sells The Bay

Recovery in the housing market continues to stumble along like a drunken sailer despite efforts of local and national media trying to sell a jaded American public on the "recovery". Clearly, if you own a home... you know that the value of your asset has not made any magic increase in almost 7 years. And gains are not close on the horizon. In a recent article from Lowes/Inman News, here is what John Burns had to say about Why the Housing Market is not Recovering: "For nearly two years, corporate profits have been surging, gross domestic product has been growing, and the majority of the key indicators we track have been moving in the right direction. Yet, home sales have remained in the dumps. The indicators that hit closest to home (pun intended) are the ones that housing needs the most. These are the day-to-day realities that keep us feeling glum: Job growth is slow

• Job growth is back, but it has lagged corporate profits as corporations find ways to do more with less. Worker productivity has increased eight of the last nine quarters, which is great for companies but not so great for the unemployed.
• Even with recent job growth, we still have 7 million fewer people employed today than at the peak in 2008, and the unemployment rate remains high at 9 percent officially, but a whopping total of 15.9 percent are underemployed or have given up their search.

We're in a "wage-less" recovery

• The median income has grown marginally in the last two quarters, but that still leaves us 6 percent below where we were in 2008.
• Inflation has been squeezing our bottom line since late last year, with gas prices up 38 percent from one year ago (according to AAA).

Home values are declining ... again

• Home prices are 31 percent below their peak in 2006 and are heading lower in many ZIP codes, which is the result of having 23 percent of all mortgages valued at more than the house value.

This all contributes to the lack of consumer confidence, especially when it comes to buying a house. While confidence has improved, a confidence level of 65 is 30 points below its 44-year historical average. Suffice it to say that moving out of the seasonally adjusted HIGH selling season and into the doldrums of summer, it is looking like 2011 will not be much different from the past several years in the California Housing Market. Real estate remains a good value, but consider holding it for not less than 15 years if you wish to see returns that warrant the expense in real dollars to acquire. Tax considerations not withstanding.