Recession Celebrates 1 Yr Anniversary ~ Is It Time to Jump Into The Real Estate Market?

A recent NY Times article posses the question that since we are 12months deep into the recession, is now the time to seriously consider jumping into the real estate market? What seems to resonate with many people is the formal announcement the nation is in a recession, not that it celebrated a one year anniversary in December. And we are bombarded with 24hr online and cable tv news reports about this fact. But walk with me through some of our hardest times in history.

CNN Money reported earlier this month some historical data when trying to judge how long this recession will last. I don't think anyone will argue this time is unique with Wall Streets meltdown, a deflated housing bubble and a teetering auto industry. The article makes note of several key factors in previous recessions:

- 1981-82 lasted a longer-than-average 16 months and pushed a 10.8% unemployment rate. The current 6.5% nationwide unemployment would have a ways to go before reaching double digits. And Austin seems to be a bit of an anomaly with slightly less than 5% unemployment.

- 1973-75 lasted approximately 16 months as well, drove a 9% unemployment level and was also caused by surging oil prices (think about where oil was this summer and today's prices).

- The Great Depression lasted 43 months from August 1929 - March 1933 with 25% unemployment! The lack of bank deposit insurance also caused massive wealth losses, were today should you have $250,000 stocked away it is FDIC Insured with recent elevated limits.

Are we at the bottom yet, possibly not? And I am certainly not advocating one throw caution out the window. There do seem to be some past baseline indicators to put things in perspective. If the nation runs close to the timeline of the first two recessions above we are nearing a turning point. So consider how long you want to own this home? My experience is most clients stay 4 - 5 years, and NAR reports first time buyers are targeting a 7 + year stay in their new homes.

A report from the Center for Economics and Policy Research, October 2008 estimates potential equity by 2012 if you were to buy now. For Austin - Round Rock scroll to page 16. I'm not going to post what they say about our city because each neighbor reacts differently, but take a look for yourselves and ask if you could handle their prediction.

Once news reports that good times are here again start to play, you might have missed the boat. Call me and we can discuss specific neighborhoods and how they have weathered the recent pullback.

John Dunham is a Residential Consultant w/ Stout Company Realtors who specializes and lives in Brentwood l 512.340.0088 l john@johndunham.com