We’re all waiting for the housing market to return to “normal” – from Northern Virginia homeowners, to prospective buyers, to industry professionals, too. The idea that despite all of the changes in the industry during the past few years, we will somehow find our way back to “how it was before” may be idealistic, but statistics show that we are certainly well on our way back up.
Trulia’s Chief Economist, Jed Kolko, periodically reviews current market statistics against those considered normal, or from before the downturn. He looks at construction starts data from Census, existing home sales data from the National Association of Realtors, and the delinquency-plus-foreclosure rate from LPS First Look. By taking a longitudinal look at all three, Kolko gives a snapshot of how quickly we’re bouncing back.
In December, 2012, construction starts skyrocketed to a 54-month high. That’s an increase of 37% from December, 2011. That's also the highest level they’ve been since June, 2008. Kolko estimates that construction starts are now 47% of the way back to normal.
Existing home sales were up 13% from December, 2011. What’s more, the percentage of distressed sales, foreclosures, and short sales is falling steadily. If you eliminate distressed sales from the existing home sales figures, conventional home sales were up 26% from December, 2011. This means that sales are 68% back to normal.
The delinquency-plus-foreclosure rate did not increase. In December, 10.61% of all mortgages were delinquent or in foreclosure. The combined delinquency-plus-foreclosure rate is now at the lowest level it’s been in four years, making it 41% of the way back to normal.
When Kolko averaged these three back-to-normal percentages together, he found that the housing market now stands at 52% of the way back. Given that in December, 2011 we were just 27% of the way there, the housing market’s future looks very promising. The final three months of 2012 saw the rate jump 11 points from 41% of the way back in September, 2012 to 52% in December, and barring any drastic changes in the economy overall, 2013 should be another positive year.
Whether you’re considering selling your current home, or you’re searching for someplace new, all of us here at The Sullivan Group are ready to help you tap into this promising real estate market. Call our office today at 703-821-1840, or contact me directly either by email or by phone at 703-268-6380.