Are We Primed for a Recovery?

News abounds on a daily basis that right now is the best time to buy a house. Interest rates are at an annual low, and today, the Fed moved into uncharted territory by taking its key rate even closer to zero, sparking optimism on Wall Street, which translated into a gain of 359 points by the closing bell on Tuesday. Could this translate into an overall better housing market?

Early Signs of Recovery

The Las Vegas Review-Journal is reporting that Las Vegas (one of the first cities to see large-scale foreclosures when the current housing crisis began) may be seeing the bottom of its housing market taking shape, as home sales improved and inventory was reduced in November. "It's the third straight month that home sales have doubled from a year ago," the paper said. Considering that home sales generally peak in the summer and dwindle as the year comes to a close, this is positive news. Keep in mind that a high percentage of these sales are real estate owned and short sales, however, once we work through this boom hangover, we should be seeing new home sales picking back up as well.

No doubt, as home prices plummet, it's a buyers market right now, but your customers may not necessarily be locals. The Los Angeles Times is reporting that "home-buying trips to America are becoming one of the more popular tour group packages in China." Lower housing costs have sparked this trend of cash-rich Chinese companies and individuals looking to buy U.S. homes as solid business investments.

Lastly, mortgage rates are finally catching up with all of the cuts from the Fed. 30-year mortgages are finally nearing 5%. According to CNBC, with the mortgage market showing signs of life, "it may be able to feed into other parts of the housing sector."

Be Nimble in a Down Economy

As more and more companies are forced to reduce their overhead to stay afloat, it may be hard to see anything but a dark cloud looming. However, news like we're seeing may point to a silver lining. Be prepared to take advantage of the market when it rebounds by utilizing less expensive marketing avenues in the interim, like banner advertising, pay-per-click advertising and social media promotions.

Create new ways to promote your home inventory, and then use online social networking tools, like Facebook and Twitter, to promote your new home specials.

As the market thaws, timid homebuyers will come out of the woodwork to take advantage of the great deals. Make sure you’re ready for them.

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References:

Bozzo, Albert. "Housing Poised to Recover But Still Needs US Help." CNBC. 15 Dec  2008.
"Fed Moving in Uncharted Territory With Rate Cuts." CNBC. 16 Dec 2008.
Lee, Don and David Pierson. "Chinese search for deals in U.S. housing market." Reading Eagle/Los Angeles Times. 14 Dec 2008.
Smith, Hubble. "Housing Market: LV homes sales soar in November." Las Vegas Review-Journal. 10 Dec 2008.

Keith Goode is the Search Engine Marketing Manager for Builder Homesite Inc. and can be reached at kgoode@builderhomesite.com

The Fed Holds Rates Steady at 5.25 percent

The Fed held steady a key short-term rate at 5.25 percent. Ben Bernanke and The Fed calmed financial market  fears about a credit crunch and inflation. In its statement, the Fed noted that "financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing."

Fears of a credit crunch have caused stock market volatility in recent weeks as investors appear to be betting that the merger boom may be over.

Many economists and market watchers believe the Fed should not cut rates anytime soon since inflation is still a real threat. Those economists cite near record high oil prices and surging wheat and milk commodity prices.

The Fed also noted that "although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected." and it expects the economy "to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy."