Saturday, June 09, 2012

Unfamiliar Feeling for Housing: Optimism, as 11 Markets Report Double-Digit Gains in May Sales


"The small businesses that drive the housing market are reporting signs that the industry may be experiencing a real comeback.

At the beginning of the spring selling season, real-estate agents and homebuilders were optimistic about the growing number of prospective buyers showing up at open houses and calling to inquire about listings. Now, it appears that interest has translated into sales.

"We had a terrific March, better April, and May is going to be the best closing month since 2006," says Mark Prather, whose real-estate agency, ERA Buy America Real Estate Services is in La Palma, Calif. Closings are up 50 percent this year from the same period of 2011.

It's a similar story across the country. Business is being driven by pent-up demand — many people had put off buying since before the recession. Prices are lower after plunging during the housing crisis. Rising rents are making buying more attractive.

On top of all of that, financing is cheap. Mortgage rates are at record lows — 3.75 percent for a 30-year fixed mortgage as of last week. In some areas, people are even saying it's becoming a sellers' market.

The Seattle area has shared in the rebound. More than 2,000 houses sold in King County in May; the last time that happened was August 2007. And the median sale price was up nearly 5 percent from May 2011, the biggest year-over-year increase since the market crashed."

2. The number of metro areas (and states) reporting double-digit increases in May home sales is now up to 11 (most with gains at 20% or higher), with Birmingham reporting a 21% increase in May sales, and statewide sales in Iowa increasing by 14%, along with a 7.2% increase in median home prices.   

10 Comments:

At 6/09/2012 10:28 AM, Blogger rjs said...

house price to income ratios for most cities are still above the pre-bubble average...

 
At 6/09/2012 11:01 AM, Blogger Buddy R Pacifico said...

Four letters now describe the housing market of much of the Greater Seattle area: SOLD

 
At 6/09/2012 12:11 PM, Blogger Some kid said...

How can we determine that housing is in recovery when interest rates have been manipulated to stimulate the housing market? How can we know if we aren't at the beginning of another bubble?

 
At 6/09/2012 6:06 PM, Blogger Jon Murphy said...

How can we determine that housing is in recovery when interest rates have been manipulated to stimulate the housing market? How can we know if we aren't at the beginning of another bubble?

That is a legitimate point, but I'd counter by saying that rates have been historically low since 2008. Why are people buying homes now? There is something more going on than just interest rates.

 
At 6/09/2012 11:01 PM, Blogger Unknown said...

This community here near me has sold about a dozen homes so far even though only 3 have been completed, and those 3 have been completed only in the past week or two. It just broke ground late in the winter. This one here just a couple blocks away sold out all of some ~40 houses in about 6 months. I think there's still 1 left, though.

 
At 6/11/2012 5:07 PM, Blogger bart said...

"Nationwide, international buyers spent $82.5 billion on residential real estate in the 12-month period that ended in March, according to the National Association of Realtors. That was up by 24% from the $66.4 billion spent in the same period that ended March 2011 and accounted for nearly 8.9% of the $928 billion spent on residential real estate during that span."


http://online.wsj.com/article/SB10001424052702303901504577460550067846454.html?mod=WSJ_hpp_LEFTTopStories

 
At 6/11/2012 5:11 PM, Blogger bart said...

I find it interesting how all of the data that indicates that there is trouble in the housing market is ignored even as every little bit of 'good' news is hyped up time after time.


The bubble or dot com mentality is alive and well, even though various stats do show a *relative* bottom has been established - much like 2009, 2010 and 2011.

http://www.nowandfutures.com/images/dataquick_real_estate_weekly.png

 
At 6/11/2012 8:05 PM, Blogger VangelV said...

The bubble or dot com mentality is alive and well, even though various stats do show a *relative* bottom has been established - much like 2009, 2010 and 2011.

Perhaps. But I expect that the shadow inventory will present some headwinds while foreign hedging of USD holdings will provide a tailwind when it comes to nominal price changes.

 
At 6/11/2012 8:33 PM, Blogger bart said...

But I expect that the shadow inventory will present some headwinds while foreign hedging of USD holdings will provide a tailwind when it comes to nominal price changes.

No argument there, and as a matter of fact here's another part of the shadow inventory that I've seen no one mention - and it is composed of at least an additional 1.5 million houses.


http://www.nowandfutures.com/images/housing_vacancies_other.png

 
At 6/12/2012 8:54 AM, Blogger VangelV said...

No argument there, and as a matter of fact here's another part of the shadow inventory that I've seen no one mention - and it is composed of at least an additional 1.5 million houses.

I believe that everyone is waiting it out until after the election. But at some point when it is least expected reality will intervene.

 

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