A House Divided. Still.

agreeing Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...

From Dennis Fassett, Cash Flow Mercenary...

In my continuing effort to figure out just what the hell is going on with the real estate market – I was coming up empty.

I read three articles that had divergent opinions as to what’s happening. Which of course leaves us in exactly right where we were. Still wondering.

Divergent Opinion #1

First up is the Wall Street Journal. They painted a worsening picture in their article on home sales. They wrote:

The number of homes tentatively sold across the U.S. fell in November, a sign the housing market hit a rough patch this winter after strengthening earlier in the year.
Pending sales have slipped for three of the past four months but are up 2.7% over the past year, suggesting halting progress in the housing market.
Lawrence Yun, the NAR’s chief economist, said “Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains.”
Other signs have heightened concerns. The NAR reported earlier this month that its more closely watched index — final sales of existing homes — slid 10.5% in November to an annual rate of 4.76 million, a 19-month low.
The housing market faces a test after the Federal Reserve’s move this month to raise interest rates for the first time in a decade. Higher mortgage rates could follow, though economists expect any increase to be slow and modest.

Divergent Opinion #2

Next, the Washington Post painted a much rosier scenario for the market this year. They wrote:·

Mortgages aren’t as difficult to obtain for most buyers, more homes are coming to market, and several programs by Freddie Mac and Fannie Mae have rolled out to make buying a home more accessible to first-time purchasers.
The lack of homes for sale has been the biggest factor affecting real estate for the past few years, but all the numbers indicate that we have finally turned the corner with more homes coming on the market.
Home-price increases and sales in many parts of the nation are indeed starting to ease, but virtually no experts predict that the market will take a nosedive like it did about 10 years ago. Instead, it’s merely slowing to a more sustainable pace that should help to ensure more modest but steady growth in 2016 and beyond.
The 2016 housing market won’t be without its challenges. Mortgage rates are expected to go up another 1/2 percentage point or so: The higher monthly loan payments they create, coupled with rising prices, will make it even more difficult for millions of folks to buy their first home. Construction of new apartments is also expected to remain far below historic averages, which will continue to put heavy upward pressure on rents.

All of this, as I said, puts us right back at square one. So keep your eyes on your market and be ready to pivot if things change.