Mohamed Ibrahim’s Blog

In an earlier post, I said that I will update my real estate analysis chart.

So here it is. Some interesting observation: it seems that we will be seeing a similar local minimum like the one happened in Jan 06. That doesn’t mean that the real estate market is up again, as the relative absorption is still below 1. This means that by the end of this year, we might observe another peak over 1.

Just to recap: The relative market absorption compares the absorption rate with that of a year earlier. The absorption rate is simply the ratio between the number of units offered on the market, to those which closed in a settlement. If the relative absorption is more than one, it means that we’re selling more of the inventory than we did a year earlier. If it is below one, then it means we’re selling less.

The market has been under the 1 threshold since June 2005, with only a small and very short peak on Jan 2007.

Some interesting things are going to happen this week:

a. I’m looking to see the reaction of the Fed’s chairman in his testimony in front of Congress this week - should be on Wed & Thursday. The expectations are favoring rate cuts, which should be good for the real estate market.

b. I will watch Hillary’s & Obama’s debate on Tuesday. Nader joined the race again. While some might see that having a little effect on the real estate market, I guess that it might actually have. Nader will not be the president, but joining the race will again arouse the fears of him spoiling the democratic candidacy. Thus both parties should try to have more practical plans. The one that I see really impractical is Hillary’s rate freeze. When you think about that from the point of view of lenders, as a lender you are now forced to swallow a larger unanticipated loss due to this regulation. Again as a lender, you will need to make more money from new loans to balance the loss. Obviously, mortgage rates will go through the roof, bringing the real estate market to a sudden freeze & pushing home values down. That’s why I think following the presidential race is extremely important.

Technorati Tags: real, estate, slump, Hillary, Clinton, rate, freeze, Nader, democratic, president, presidential, race, nomination, Obama

Tags: Clinton, democratic, estate, freeze, Hillary, Nader, nomination, Obama, president, presidential, race, rate, real, slump

This entry was posted on Sunday, February 24th, 2008 at 10:40 pm and is filed under Real estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.