Saturday, September 05, 2009

Real Estate Recovery

Exhibit A: Portland home sales jumped in July, marking the first year-over-year increase in sales for any month since early 2006. A total of 3,375 new and resale houses and condos closed escrow last month in the Portland metro area. That was up 9.3% from June and up 5.8% from a year earlier. The number of homes sold in July was the highest for any month since August 2007, when 4,242 sold.

Exhibit B: Seattle home sales rose above last year's level for the first time in more than three years last month amid relatively robust sales below $300,000. The median sale price fell, ending its three-month streak of month-to-month gains. A total of 4,221 new and resale houses and condos closed escrow last month in the Seattle area. Last month's sales rose 2.5% from the prior month and were 8.8% higher than a year earlier. July's sales total was the highest for any month since October 2007, when 4,434 homes sold. Last month's annual gain for total sales ended 37 consecutive months of year-over-year declines.

Exhibit C: Phoenix-area home sales climbed above a year ago for the seventh consecutive month in July but dipped below June as purchases of foreclosed properties continued to wane. The region’s decreasing reliance on sales of heavily discounted, lender-owned homes helped the median sale price inch higher for the third consecutive month. A total of 10,288 new and resale houses and condos closed escrow in the Phoenix metropolitan area in July, down 4.1% from June but up 27.7% from a year ago. Total home sales were the highest for the month of July since 2006.

Exhibit D: Las Vegas home sales rose above a year ago for the 11th consecutive month in July as investors and first-time buyers continued to target lower-cost, post-foreclosure properties. A total of 5,311 new and resale houses and condos closed escrow in the Las Vegas metro area last month, down 3.8% from June but up 28.5% from a year ago. It was the highest sales total for any July since 6,530 homes sold in July 2006. July marked the 16th consecutive month in which sales of existing single-family detached houses rose on a year-over-year basis. The 3,925 single-family house resales last month were the highest for any July since 4,555 sold in July 2005. Resale condos have seen an annual sales gain for 13 straight months and in July sales were the highest for that month since 2005.

From DQNews.

7 Comments:

At 9/05/2009 12:26 PM, Blogger al fin said...

Mark, can you break the data down between investor speculation and actual home buyers who intend to occupy the homes?

It looks as if a large number of investors are guessing that the market has hit bottom. They are speculating on the timing of the recovery. If they guessed wrong, expect another, deeper recession to follow.

Money is desperately seeking out a safe haven, with oil proving to be a fickle friend currently. If US homes and condos appear underpriced, money will flow in that direction.

 
At 9/05/2009 12:43 PM, Anonymous Anonymous said...

Exhibit E: The Law of Demand

When prices have dropped upt to 50%, government is giving subsidies and guaranteed loans, sales will be up. This is not a sign of 'revovery'. It's a sign of desperation, distress, and vultures feeding on dead corpses.

Life is great if you're a vulture or parasite!

Exhibit F: Prices AND sales are dropping in just about every place in the country you didn't mention in an exhibit.

To answer the first person's question, there is a wide disparity between data sources. Catch the discussion on the Calculated Risk blog. FHA homebuyers (often misreprsented as 'first-time') make up between 29% and 43% of buyers. Absentee buyers (aka speculative investors) are about 30% of sales. So the majority of these loans are risky speculation or highly leveraged purchases. Sound familiar?

BTW, the FHA's insurance program is begging for money from Congress, not surprisingly, because they're broke. Their default rates aren't extraordinary - just as high as every other loan class - but with low LTV the house they insure are deeply under water so their losses are huge.

 
At 9/05/2009 5:16 PM, Anonymous Confidential said...

Great info...
I want to suggest a source of more news on the real estate market. Watch and learn with this video that offers tips for home buyers.

http://www.veoyalquilo.com/blog

 
At 9/05/2009 6:30 PM, Blogger Benjamin said...

Baby, the Fat Lady is singing for this recession, and I happy to see it go down.
Better times ahead. I predict a good, solid run in all assets--stocks, real estate, commodities, maybe not bonds.

 
At 9/06/2009 7:44 AM, Blogger marketdoc said...

Make no mistake. The real estate market is recovering as is the overall economy. This is what they used to call "the Business Cycle." Many real estate transactions are with cash buyers right now. Certainly this is more stable than the highly leveraged amateur speculators we saw three years ago.

 
At 9/06/2009 8:16 AM, Anonymous Six Ounces said...

What difference does it make between speculating with cash and speculating with loans? Sure, the latter poses a bigger danger to the banking sector, but the financing methods are irrelevant with respect to properly timing a market bottom.

If this is a false bottom, and there's every reason to believe it is, a lot of people are throwing away a lot of money.

You make it sound like people with cash are somehow better informed than people without. Most cash buyers went down with the ship in the recent bust. Rents are plummeting by the fastest rate in the last three recessions - forecasted to dive by almost 21% by second quarter 2011 from the peak last year. How is that going to affect the negative cash flows of those absentee buyers? How long before we see them default?

There is never anything "stable" about speculation. By its nature it's risky and volatile. Economic fundamentals are not supportive of increasing home sales right now.

 
At 9/07/2009 7:30 AM, Blogger marketdoc said...

Nobody said anything about "speculation." I'm talking about people with CASH buying second homes for vacation or as their primary residence. Those people who some think are "throwing their money away" will be selling to others at a profit in the next few years. They will be selling to others who wanted to wait past the "false bottom."

 

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