Archives for March 2012

Pundits and professionals give varying answers to the question of what a housing recovery looks like. According to the Housing Guru Blog, some see it as a return to the home values seen before the crash; others define it as the annual rate of over 8 million sales. And still another camp believes that neither picture is realistic.

Economist Paul Dales at Capital Economics notes that Americans ought to pay greater attention to a different indicator — accelerated home sales. CNN Money reports that existing home sales reached 4.26 million in 2011, up from 4.19 million transactions in 2010. And in the past six months, total homes sales have gone up by 13%. The positive growth in sales is a sign that the market is recovering. Additionally, if the benchmark of health is an inventory at or below 6 months, then January’s supply of 6.1 months is good news. But it gets complicated. Some analysts were disappointed by February’s numbers, particularly with the slight fall impending home sales by one half of a percent month-over-month. All eyes will be on March’s stats.

In spite of what appears to be a sluggish recovery, housing continues to be more affordable than renting, due in large part to cheap interest rates and low property prices. Trulia reports that in 98 out of the top 100 housing markets, buying is indeed more affordable, the two exceptions being Honolulu and San Francisco. Cities that have strong long-term growth prospects and limited land to expand should expect to see a rebound in prices over time, whereas older areas with limited growth may remain static. So there’s more than one way to look at recovery, and the expectation that housing prices regain pre-recession levels may be neither feasible nor desirable.

Let me know how I can help: 206-713-3244 or email me.

I remember August 7th, 2007 like it was yesterday. That day, sub-prime loans disappeared. Though the market could not sustain the frenzy that had made many people nuts with unrealistic ideas about housing, the loss of those loans and the buyers that they represented, had a trickle up effect that we are still feeling in many parts of the market 5 years later.

Since it has been such a challenging time for the economy, we all are looking for the light at the end of the tunnel. I look for it too. My mother has an expression; “8, or 80” (spoken in Portuguese), her version of “all or nothing”. We have health in many parts of our market. However,  I am not prepared to say we’ve turned a corner. There are neighborhoods where the sellers are in control for sure. There are sectors where inventory is low. That being said, what is going on in the market? is it a “Buyer’s Market” or a “Seller’s Market”?

A year ago, on the Eastside, in the affordable price range ($350,000 – $600,000), there were 923 properties for sale and 214 homes with pending contracts. A year later and we have 610 homes available and 256 with pending contracts. The balance of power seems to have shifted.

In that same price range on the Eastside, the market seems to favor the seller, not the buyer. As expressed in the graph below, if sales continue at this pace (with no other homes coming on the market), there will not be any homes left for sale in 2.4 months. Of course that’s not how it happens, this is a way to express the inventory levels.

What does this mean for you today? There is a very active real estate market on the Eastside. If you or someone you know is considering buying or selling, this is a substantially different market that what we saw in the fall. Being prepared with a strategy that takes into account the current information, is important in being successful in purchasing or selling right now.

Let me know how I can help: Emmanuel@EmmanuelFonte.com or 206-713-3244