“Market prices have to go higher to provide incentives for more new houses to be built,” said Aaron Edelheit, CEO of Atlanta-based The American Home, a company that invests in distressed properties and turns them into rentals. “I believe we are on the cusp of a massive housing shortage in many parts of the country due to the historic lack of residential investment in the last five years. This summer, I expect the housing market to be ‘blue flame’ hot.”

(Read More: What Tops Home Buyers’ Wish List Now)

Prices today are rising fast because supplies of homes for sale are so low. Both new and existing homes are running near four month supplies.

For new homes, builders just aren’t able to start fast enough, due to labor and land restraints.

For existing homes, there are fewer distressed properties for sale, a segment that has driven the market into recovery, and organic homeowners are either unwilling to list their homes for fear of selling at the bottom, or unable to list because they are still underwater on their mortgages.

(Read More: Foreclosures Fall Due to New Laws)

“Taking new and existing homes together, the relationship between the months’ supply of unsold homes and house prices points to an acceleration in the pace of house prices gains in the year ahead,” said Paul Diggle of Capital Economics.

Article source: http://www.cnbc.com/id/100496564

The Paragon Real Estate Group is offering an August 2012 market update on the cycles in the homes market in San Francisco since 1983.

San Francisco, CA (PRWEB) August 18, 2012

The Paragon Real Estate Group is announcing the release of its August 2012 market report. The update from the real estate investment and brokerage company discusses the historical dynamics of the San Francisco home market from a longer term perspective with an eye to what lessons the past may hold regarding future trends.

“Financial market and housing market cycles have been around for hundreds of years. While future cycles will vary in their details, the causes, effects and trend lines are often quite similar, and may offer useful perspective and hold lessons for the future,” Patrick Carlisle, chief market analyst for Paragon Real Estate Group, said.

“Over the past 30 years, there have been two full housing market cycles, and we are now on the cusp of a third. The first cycle starts with the country coming out of the late 1970s, early 1980s recession. As the economy recovered, the housing market started to appreciate in 1984 and this surge in values began to accelerate deeper into the decade. Over six years, the market appreciated almost 100 percent. Finally, the 1980s version of irrational exuberance, as well as the late 1989 earthquake here in the Bay Area, ended the party. A new recession arrived, home prices sank, sales activity plunged and the market stayed flat for four years. Still, even after the decline, home values were 70 percent higher than when the boom began in 1984.”

Carlisle continued, “The second cycle looks similar but elongated. In 1996, after years of recession, the homes market suddenly took off and became frenzied — similar to what we’re experiencing today. The dotcom bubble pop and the September 2001 attacks created a market hiccup, but then the subprime and refinance insanity, CDOs and derivatives, and Ponzi schemes super-charged a housing bubble. From 1996 to 2006/2008, the market went through an astounding period of appreciation. (Different areas hit peak values at different times from 2006 to early 2008.) Then, in September 2008 came the market crash.”

Across the country, home values fell 15 percent to 60 percent, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco got off comparatively lightly with declines in the 15-percent to 25-percent range. The least affluent areas got hammered hardest by distressed sales and price declines; the most affluent were typically least affected. Then the market stayed flat for more than three years, albeit with a few short-term fluctuations.

Paragon’s chief market analyst continued, “In 2011, San Francisco began to show signs of perking up. An improving economy and growing buyer demand coupled with a low inventory of listings began to put upward pressure on prices. In 2012, as in 1996, the market abruptly grew frenzied with competitive bidding. The city’s affluent neighborhoods led the recovery, and those considered particularly desirable by newly wealthy, high-tech workers showed the largest gains. However, virtually the entire city is now experiencing a high demand-low supply dynamic. The SF median house sales price has increased dramatically in 2012, though varying widely by neighborhood. But it’s still an early recovery — though seemingly a strong, healthy one — and the economy remains susceptible to big financial/political crises. However, the greater Bay Area, the state and the country are all beginning to show signs of a housing recovery. New home construction is rising, distressed sales are declining, the rent vs. buy equation has turned favorable to buying, and values are ticking up again.”

“Absent another financial crisis, we expect this positive trend in the San Francisco homes market to continue,” Carlisle said.

For more information about Paragon Real Estate Group, its real estate agents or its homes for sale, please view its website at http://www.paragon-re.com or visit 1160 Battery St. in San Francisco. For additional market analytics, visit http://www.paragon-re.com/MarketDynamics/.

About Paragon Real Estate Group

Article source: http://www.virtual-strategy.com/2012/08/18/san-francisco-real-estate-company-paragon-real-estate-group-releases-30-year-overview-san