Real Estate market Trends - prices and sales are increasing

After one year of falling prices and home sales the market is hotter than ever.   This spring the increase in sales activity was higher than we normally see in the spring.  In Santa Clara County sales are up 29% but prices are down 26% compared to the same period last year.

I had the pleasure of attending one of the very fine seminars at the Santa Clara County Association of Realtors yesterday and listen to NAR's Chief Economist Lawrence Yun, Ph.D. as he talked about current Real Estate markets, his interpretations of the statistics reflecting both past and present trends and where he predicts it will head in the near and far future. 

In the last few years real estate prices dropped so fast and so steep that buyers got out of the market and cautiously followed the  implosion from the side lines.  Now thanks to government incentives such as the $8,000 first time homebuyer credit and $10,000 new construction purchase credit, and other factors such as low prices and plenty of inventory, has brought the buyers and inventors back to the real estate market and they are ready to purchase.  As a matter of fact sales numbers are higher this spring than the same period in 2008.

Currently a large portion of the inventory is distressed properties such as bank owned (and thus foreclosed) and short sale properties.  There is still a fair amount of "conventional" sales (not distressed). 

It takes longer to close distressed properties and there are a few good reasons for them.  

• Short sales need approval from lenders and we all know how long that can take

• the government has put new regulations in place such as the HVCC (Home Valuation Code of Conduct). Currently only Fannie Mae and Freddie Mac have adopted this code.  Many appraisals are now done by appraisers appointed by the lenders who may not be familiar with the geographical area and appraise properties much lower than the actual value is; the fees paid for appraisals by the homebuyers are up but appraisers receive less for their services.  NAR (National Association of Realtors) is working hard to get the HVCC code suspended.

Dr. Yun noted:

that it is interesting to know that the real estate markets in most parts in the country didn't experience the “burst bubble” effect because there was no real estate bubble. Only the markets in California, Nevada, Arizona, Florida (basically desert states) and other states on the East Coast who experienced a real estate bubble are now feeling the effects of the “burst bubble”

What are the trends in your market? Do you agree with this statement?