Signs of stability
This month brings mostly good news with leading real estate indicators showing improvement and promise of recovery while there is still cause for concern, especially as the real estate tax credits come to an end.
While overall buyer and seller sentiment is trending positively, buyers fear financial instability in their home, citing it as the most common prohibitive factor in their home purchase.
First time buyers
Americans may not see homeownership as the American dream anymore, they still believe that homeownership is critical to the economy and in response, first time home buyer activity is on the rise.
New home sales
New construction is performing dramatically different than just 30 days before, experiencing a rebound. Last month, the U.S. Census Bureau reported that sales of new single-family homes were up 7.0% from February but down an alarming 13.0% from February 2009, making it look like tough times were ahead for builders.
This week, the Census Bureau reports that in March 2010, sales of new single-family homes is at 26.9% above February and a very impressive 23.8% above March 2009, leaving only a 6.7 month supply, despite February ending with a dismal 9.2 month supply.
While sales of new homes are skyrocketing, the prices of the homes sold is dipping a bit. The median sales price of new homes in February was $220,500 but only $214,000 in March, representing a 3.0% drop.
Existing home sales
Like new home sales, existing home sales were down last month but experiencing a rebound as well, according to recent data released by the National Association of Realtors. February existing home sales had slipped 0.6% but risen 7.0% from February 2009, and March home sales rose 6.8% from February and (like new home sales), a large rise from March 2009 with a 16.1% jump.
The NAR survey shows first time buyers account for 44% of purchases and 19% were investors. The national median existing home price was $170,700 in March, up from $165,100 dropping a bit along with new home sales.
Bargains across America
More signs of stabilization come with Trulia.com’s report that the number of homes listed on their site having experienced at least one price reduction is down 26% annually.
“With such a dramatic drop in home price reductions over the past year, we’re beginning to see early signs of stabilization in the housing market on a national level, as well as locally in certain markets,” said Pete Flint, Trulia co-founder and CEO.
ZipRealty reports that luxury housing markets experienced the largest price reductions, creating the biggest bargains for buyers in the first quarter of 2010.
Hope for the USDA program and rural buyers
For rural buyers, hope came this week in the form of HR 5017 passing, making USDA loans self funded through fees rather than the current method of using federal funding to backstop the guarantee.
The news couldn’t have come sooner, as supporters claim the funding will dry up literally over the next few days. HR 5017 next goes to vote and is expected to be approved.
According to NAR, in both February and March, distressed sales accounted for one in three existing home sales. Last fall, NAR began recognizing the Certified Distressed Property Expert designation in response to what has continued to be a rise in distressed sales.
First time buyer activity is on the rise along with existing home sales and the new home sector has improved greatly and lowered supply to a healthier number. The luxury home market is experiencing the greatest price reductions and overall, the number of price reductions are down from 2009. HR 5017 passed this week bringing hope that the USDA program won’t die. The downside is that distressed homes are still at elevated rates, so while the residential real estate sector is showing signs of stability, the weak point in the system is the distressed homeowner.
If programs like HAMP were to actually work, this sector would be stronger, but red tape and poor politics keep distressed homeowners in distress. We suspect that this summer, we’ll see a new program or a shift in how the government treats short sales and foreclosures. Benn and I were talking this week about the old $100 down HUD program moving inventory- maybe there will be a revitalization of the old system or emergence of a new form of helping distressed owners or shuffling foreclosed inventory.
CC Licensed image courtesy of annahape via Flickr.com.