Ever wonder what is REALLY going on with this crazy economy and nutty Real Estate market? Brian thought you'd all be interested in leaning a little about the current trends we've been seeing in the market lately... Enjoy!
As of March 2012, there are still mixed signals for the US real estate market. According to figures provided by the National Association of REALTORS, existing home sales remain relatively flat with a -0.9% decline between February and March. However, year-to-year sales are significantly up. There was an 8.8% gain between 2011 and 2012. These numbers are seasonally adjusted. When non-seasonally adjusted numbers are used, there was a strong month-to-month gain of 10%.
Regionally, it appears that the strongest recovery is occurring in the Northeast and Midwest. The South is showing steady improvements. The West is recovering slightly slower than the rest of the country.
The other major factor is existing home prices. In general, they remain relatively flat as well. The year-to-year increase was only 0.3%. Prices should be expected to show some seasonal movement upward between now and August.
On the economic front, the official US unemployment rate dropped to 8.2% for March. Although last week’s job report show that employers only added 120,000 jobs in March, which was disappointingly below the prediction, the US economy is steadily adding jobs. US Consumer Confidence, which drives about 70% of the economy, is back on the rise. There is little talk now that the European debt crisis or a slow down in China will drag us back into a recession. In fact, the widely held belief is that the US economy – not China – will once again be engine that will drive the world economy for the near future.
The continued overhang of foreclosures and unusually tight lending standards remain a drag on the recovery of the real estate industry. Of course, continued good news on the employment front, which will be bolstered by consumer confidence, should help local buyers return to the market.
The revival of the relocation segment of the real estate market should be occurring soon. When employers re-employ their former workers and tap the remaining local unemployed workforce, focus should return to hiring out-of-town labor. And, there will be an increased interest in new plant openings and further retail development. Those who are delaying relocation due to their inability to sell their current homes, will soon have more options as local buyers increase their activity. As more loans are made, lenders will have more options as their risk will be spread over more loans and thus be somewhat reduced.
There has been a steady increase in real estate advertising over the past couple of months. In general, we have seen an improved interest by real estate companies and agents in finding new customers. This trend, however, is growing faster than the rate of existing home sales – which is a lagging indicator of future growth. This may be better explained by a significant increase in pending sales both month-to-month and year-to-year as reported by NAR.
Barring any unforeseen economic disruption, our conclusion at this point is that the real estate market has been showing the nascent signs of a modest recovery over the past few months. This should portend well for the rest of 2012. We anticipate that seasonal summer sales will show a marked improvement over the past four years.