Get ready for a burst of foreclosed homes hitting the market this spring.
After holding back for a while, the big banks and Fannie Mae "will take their fingers out of the dam" that's holding back the huge volume of foreclosed homes, national real estate guru and speaker Steve Harney said this week.
It's a way that, from time to time, the enormous supply of bank-owned real estate can be brought to market without destroying the market, he said.
It's a view shared by Intracoastal Realty President Jim Wallace.
Prices will fall here in the quarter beginning in April as those foreclosed homes hit an already weak market, he said, and they won't make it back to present levels until this time next year.
Harney, who was in town to speak to Intracoastal agents, and Wallace sat down this week at the real estate firm's corporate offices to discuss the struggling housing market in terms both sobering and hopeful.
For example, "A house that was priced on the water for over $1 million sold for $500,000," Wallace said, though he wouldn't give the location.
Both men repeated the old real estate saw, "It's never been a better time to buy a home," but this time the agents and their bosses really mean it.
Why? Selection, price and interest rates, both Wallace and Harney said.
At the height of the boom in 2005, there were 900 homes on the market here, Wallace said. Today there are 3,000. And, the ones that are selling now have 2003 prices, he said.
If buyers are waiting on the fence, they should consider rising interest rates.
"If interest rates go from 4.5 to 6 percent, (buyers) have lost 20 percent of their buying power," Wallace continued.
Also, lenders have loosened up on requirements to qualify for a mortgage, Harney said.
Wallace said that homeowners who lose on the selling side will make it up on the buying side.
One of the reason that sales and prices in the Wilmington area have slid is "because people in the Northeast have been historically one of our main buying elements," Wallace said. "They haven't been able to sell their homes."
But he said that the latest measure of consumer confidence was the highest since May. "That's because other areas of the economy are improving and that will translate into letting them sell their houses," he said.
When they sell, however, they'll get less for their homes than they once thought, and when they come here they'll be buying less expensive houses than they once would have, Wallace said.
Houses priced above $300,000 have been hit the hardest here, he said. "The lower priced houses have really been the strongest market in the last several years." There are, however, "some encouraging signs in the upper end now," he continued.
"The fastest growing segment of the real estate market in the U.S. is homes that are selling for more than $1 million. People are more confident that the market is turning," Wallace said. "And they are really savvy buyers, so they realize that we are at or very near the bottom."
Though prices are weak, Harney said we are in a run-up in sales across the country, and he foresees eight straight quarters of increases that began in the fourth quarter of 2010.
"There is no question that there's a lot of cash on the sideline, and while the sales are not as brisk as we'd like," Wallace said, "last year we sold 2,662 houses in New Hanover County. That's a lot of homes.
It's still less than half of what it was in 2005, "but some people think it's a good time to buy."
Wallace admitted that some attribute his optimism to his position as a head of a major brokerage here.
But then he cited John Paulson, the hedge fund trader who scored hugely when he bet against real estate in 2006. "He said it was a bubble," Wallace said.
About a month ago, however, Paulson was giving a speech at New York University" and Wallace quoted him. "He said ?this the best time to buy a house in 50 years. If you don't own a home, buy; if you own a home, buy another one; and, if you can, buy a third. Loan money to your relatives so they can buy a house.'
"A guy who is that savvy is telling you that it's the bottom," Wallace continued, "It's pretty believable because he had it right the first time when it was going down."
Wayne Faulkner: 343-2329