NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Creighton University economist Ernie Goss sees one particular area of the economy as stronger right now than he thought.
"Residential real estate, there, is holding up better than I would have ever expected," Goss said. "Watch out for those inventories as they increase and housing prices come down rather than going up. Now, that's going to be a few more months out before we see that."
Commercial real estate is already seeing a price drop.
"That's, of course, a lot to do with office space. Individuals still are working from home, and we're seeing, of course, industrial side. That would be, of course, manufacturing. That's doing reasonably well. It's on the residential side where we're going to see the correction, in my judgment. Individuals cannot continue, families and individuals cannot continue to pay 40 to 45 percent of their income on housing."
Real estate taxes are causing older folks who have lived in their home and may even have it close to paid off say to themselves, I can't afford to stay where I am because the taxes are going to price me out of my home. If that starts to happen, that would create some of that additional inventory to drop overall prices.
"We're seeing that," Goss said. "It started in Florida. It's moving up to Georgia, over to Texas. It was already in Texas. Look at Austin, Texas. Texas, Arizona, to some degree California. Northeast is not doing as poorly as the rest of the nation in terms of real estate prices, monthly income to support those real estate prices there. It's a tough, tough time for those renters as well. In other words, when you want to leave your house and move to another location, you got to pay higher rent as well. It's getting on all cylinders in terms of negativism for the housing sector right now."
Also, the changes in the structure of realtor agreements may cause some ripples in that market, but how many remains to be seen.