State of Housing Market Today December 2012

Raleigh.  News media shouts that the housing market is back.  Is it?  How does answer to this question affect you if you want to buy or sell a house?  Find out.

Let’s peel back the headlines and look at some less-reported figures.  I’ll answer the questions “Is the market back?” and “How will this impact on you?”

S&P/Case-Shiller-Home Price Indices:  Probably the most quoted source quoted by the media just reported that home prices rose 2.15% in last quarter reported but 1.04% for the last year.  (Report tracks 20 metropolitan areas)

 

Is the exuberance warranted?  Well, you tell me.  Does an annual 1% increase over a year create exuberance for you? The chart shows we are far from the market’s peak and gains are followed by losses.  Keep this in mind:

Market prices increased 1.05% since its market low in early 2009.

In addition to home prices having a long way to climb to be back to square one, there are abnormal factors in the current market according to the National Association of Realtors.

1.  Sellers are entering the market at a slower pace than buyers.  This places an upward pressure on prices.

2.  First time homebuyers make up 31% of the market.  Industry norm is 40%.  This places a downward pressure on prices.

3.  Distressed sales (foreclosures and short sales) make up 25% of home sales down from a year or two ago.  They still place a downward pressure on prices since short sales sell for an average 14% discount and foreclosed properties sell for an average discount of 20%.

What will happen to home prices when this abnormal market clears up?  Will we see a rise in the medium home price index?

A final stat:

“Thirty-two percent of homes purchased in October were on the market for less than a month.”

Anecdotal evidence from real estate agents:  Full-price offers and multiple-offers are increasing.  Agents are confident that market will improve in 2013.

BOTTOM LINE

The housing market is on a long trip back.  It makes progress, loses its way and drops back.  A 1.05% increase since 2009 demonstrates progress is slow, but a 2.15% increase in last quarter provides hope.

So, the market’s not back though it is slowly moving in the right direction in fits and starts.  The normal part of the market between sellers who live in home selling to buyers who will live in home is showing strength.

Sources:  Case-Shiller & National Association of Realtors

Kathy Godin, Branch Manager & Award-Winning Loan Officer
Originally published: http://raleighmortgagegals.com
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