Positive Economic Signs for Real Estate

By
Real Estate Agent with The Maine Real Estate Network

Enough already! Economy this! Housing market that!. It seems like we have been bombarded with mostly bad news forever. Every month Lewiston-Auburn would-be home sellers and prospective buyers hope for signs that the economy has turned around, and this month was no exception. Despite the relatively good news that unemployment numbers continue to show promise, the question remains: just how will we know when the Lewiston-Auburn real estate market begins its upswing for real?

Housing Headlines Market forecasting is always a bit like reading tea leaves, but for a change let’s take a look at a couple areas that could be indicators of positive economic signs for a real estate recovery:

 “Inventory Level”

Inventory is one of those real estate terms that can be misunderstood by anyone who thinks of its everyday meaning. Instead of being the total number of homes on the market, in real estate the term “inventory” is often expressed in months. It describes how long it would take to sell all the homes currently on the market if no new homes were listed.

 When housing inventory shrinks, it means people are buying homes – a solid positive economic sign for real estate. While there are currently signs of shrinkage nationwide, the experts remain cautious due to what is known as the “shadow inventory.” These are homes that are in the foreclosure process but not yet on the market. It also includes those homes owned by folks who are putting off selling until prices recover.

 As a local real estate professional, I pay close attention to “absorption rates”: the rate at which homes are able to be sold in a given market segment. Real estate is local and some parts of the market (price range) move at a different rate that others. So while the statewide information we get on the local news may give us the pulse of the real estate market, I don’t find it detailed enough for a personal consultation. We analyze the specific market segment for our clients. 

Unemployment

Among the most important economic signs to keep your eye on are the unemployment numbers. Rampant unemployment -- and the resultant concern over job security -- drags down consumer confidence in Lewiston-Auburn and everywhere else. But when people begin to get back to work, confidence always builds. That is why it was an early positive sign for the real estate industry when the U.S. Labor Department came out with its November unemployment numbers. They are falling, and now sit at 8.6 percent -- the lowest level in over two years. According to the Washington Post, the broader figures suggested that while this improvement may be modest it is also “widespread”.

So while the economic recovery is still sluggish, there are some stirrings that the worst may be over. If so, one implication for Lewiston-Auburn homeowners and potential buyers is that keeping an eye on market trends is once again a good idea.

 

Comments (5)

Lori Gardiner
RE/MAX River's Edge - Bristol, RI
GRI, SRS, ABR, e-PRO

Hi Tanya,

Great post...thanks for sharing!  Best wishes for a successful 2012!

Jan 13, 2012 12:50 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Great post, I agree with you completely. Let's make 2012, the best year ever!

Jan 13, 2012 12:50 AM
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

We are putting all our eggs in one basket for 2012. .we are betting that real estate is going to be hot!

Jan 13, 2012 01:07 AM
Harley Wilcox
West Group Real Estate - Victor, ID
Harley Wilcox

In our local market the new listings seem to price to sell and then you have the "list for life" properties that are on the market just to have r.e. signs on the highway. absorption is distorted by the listed for years.

I do like the absorption rate as well as the list sold price ratio as indicators of the market. I hit the pillow on the eve of the new year and thought "2012 is going to be a good year". I wonder how many others feel the same?

Jan 13, 2012 01:07 AM
Charlie Dresen
Steamboat Sotheby's International Realty - Steamboat Springs, CO
Steamboat Springs, CO e-Pro

Great post. I ran absorption rates in my area last month. We went from 18 to 10 in the last year for single family homes. 

Jan 13, 2012 01:09 AM