Dooley Real Estate
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WINSTON CHURCHILL AND THE MARKET

by Paul Dooley

After the first British land victory of World War II at El-Alamein in Egypt, Winston Churchill famously said: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” Not to conflate the cost in lives and national treasure of the war with the economic collapse that began with the fall of Lehman Brothers in September of 2008, but the lingering recession, the greatest since the Great Depression, has been devastating.

Millions of people have lost their homes, jobs and savings as foreclosures reached epic numbers, employers folded or drastically cut overhead, and families’ equity in their homes evaporated. The facts are stark: Real estate values have dropped by over 30% and are now at levels not seen since 2002. People who had become accustomed to having accrued equity in their homes available to fund improved life styles or college for their kids, found that the debt on what had historically been their most secure investment suddenly exceeded its value and was increasingly hard to sustain—and many couldn’t and simply walked away.

Real estate brokers have become used to being asked by anxious friends and clients, “Is the market improving?” And until very recently the honest answer has been. “Not really.” They’ve had to point unhappily to rising inventories of unsold homes, declining sales, and falling prices as indicators that a recovery was a long way off. And it probably is. But back to Churchill’s “end of the beginning.”

There are signs that we may have found the bottom and that a recovery (not a return to the boom years, certainly, but a gradual recovery) is trying to find its legs. All of the local brokers report a significant increase in the number of people making appointments to see houses. The number of actual sales in our seven-town primary market area has increased by approximately 10% in the first four months of 2012 over the same period in 2011 (although the median sale price may still be dropping). And segments of the market that have been burdened by excess inventory (Kent Hills condominium units, for example) are experiencing improved absorption rates. So are we at Churchill’s El- Alamein moment? Perhaps. But remember that Anzio, Normandy and the Battle of the Bulge were yet to come.

 

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