First Quarter Sets the Pace for 2011’s Real Estate Market

After a good year for the real estate market in 2010, this year’s results have big shoes to fill. So far, according to the first quarter numbers, 2011 is competing passively with the previous year. Depending on your area however, you could have a better chance at landing a good sale on a house. There were a few factors that went into last year’s success, including cheap supply of lumber due to the effects of weather on lumber companies in the southeast part of the U.S. Another harmful factor in the market being that the net cash required by operating activities was $1.2 million for the first quarter of 2011, which compares to net cash provided of $4.4 million a year ago.

So far, Q1 has failed to meet last year’s net sales by nearly 3 million dollars, as has the net income, falling behind 2010’s results by an incredible 2.16 million.

It shouldn’t shock anyone to know that home ownership is on the decline. With an increase in foreclosures, a tough job market and President Obama backing off from policies that encourage home ownership, it’s no wonder. Obviously, the loss of jobs in our economy and the downgrade of income has put a lot of input into the market, as has the decrease in housing supply. That’s right, I read the other day that the real estate market is actually encouraging buyers to consider building houses instead because of our dwindling number of move-in-ready homes. It makes sense, that we’d see a threat to the number of built houses available, since deforestation, clean water, and polluted air all seem to relate as a result of over-populated areas.

I’m very curious as to what will happen in the following quarters if numbers continue on this rapid decline. The current trend is a little scary for potential home owners, like myself, who would one day like to move away from renting. At the height of real estate market, the rate of home ownership nationally was 69%. In 2010, the rate dropped to 66.9%. All of those things are reflecting in the home ownership rate that is still somewhat declining, and it’s generally favoring the rental market.

I read in a recent LA Times article, that 25-to-29 year-olds are looking towards renting more than home ownership.There are several reasons for this:

-  Shrinking middle class wealth (Mom & Dad used to be able to help the kids out with home buying and that is less likely now)

-  Large student debt

-  Uncertainty in the job market makes the flexibility of renting more desirable

This information is actually pretty concerning for me personally, as I’m sure it is for many other individuals of my generation who are in the awkward in-between of renting for a few years and hoping to own one day. Hopefully, like most things in our economy, these numbers will fluncuate again and there will be a calming gap of decent home ownership!