Steve Harney helps real estate practitioners, homeowners, sellers and buyers understand complicated financial information about the housing industry. His blog Keeping Current Matters is my daily "go to" source for usable information.
The most important point he makes in this post is that understanding the market requires keeping several seemingly contradictory ideas in your head at once:
(1) transactions are increasing
(2) prices may show some stabilization
(3) new listings outpace the number of contracts
(4) the rate of the increasing inventory is likely to continue to rise due to the anticipated rise in foreclosures over the next year or two.
I've written about this before: "stabilization" of prices means that the DROP of prices is slowing. Whether a month or two of "stabilization" will create a long-term trend is highly doubtful, because the inventory continues to rise. The inevitable result is a increasing supply of houses for sale and a consequent decrease in prices.
Steve's final point: if you're a seller, your house will be worth less in the very near future. If you want to sell, price your home compellingly, and be one of the proportionately few homes sold this year.
Prices: the Truth… and Nothing but the TruthThree different home pricing indexes were released in the last ten days: the S&P Case Shiller Index, the First American CoreLogic Home Price Index and the RPX Monthly Housing Market Report. Each report told virtually the same story. House prices remained pretty much the same since the last reporting period (see table below). The headlines over the next few days will report that prices ‘have stabilized’ or that ‘the worst is over’. Nice thoughts. The only question is: are those claims accurate? Let’s look past the headline and first paragraph of each press release and find the true conclusion of their authors. Where are prices currently?All the indexes are released at the same time each month and are often compared as equal representations of current prices. In actuality, each report looks at a slightly different set of data selected from a slightly different time period. (But let’s not get into that in this post.) Here are the findings of each report: We can see how a cursory examination of the data could bring someone to the conclusion that prices have in fact stabilized. And that is probably true to some degree. But the real question is where prices are headed over the next 6-12 months. Where do the reports think prices are headed?Each index discussed the future to some degree. Here is what they said: S&P Case Shiller Index:
First American CoreLogic HPI:
The RPX Monthly Housing Market Report:
Each report warns about uncertainty in pricing as we move forward. As we always say: IT IS A MATTER OF SUPPLY AND DEMAND! What does this mean to you?Don’t make a decision based on the headlines over the next few days. If you are considering selling, realize your home is worth more today than it will be tomorrow or next week or next month. |
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