Real Estate. Economics. Business
Here’s another story with a more positive angle to the housing market woes. Suze Orman, host of many financial shows on TV and radio as well as author of several top selling financial books, discusses the opportunities for first time home buyers.
The fact is there is opportunity galore for buyers at any level. Stay tuned…more positive news stories are about to break.
The Minneapolis Area Association of Realtors just released the latest weekly report. The headline number this week is that pending sales were only 6.9% behind last year’s pace. Typically that number has been between 15-25% each week. It will be interesting to see if this trend continues throughout the spring. In my opinion, the pending sales number is the most important data point if there were just one data point we needed to watch.
Here is the note from the association:
Potential home buyers waiting for even more new inventory to hit the market may be waiting a long time. For the week ending March 15, there were almost 300 fewer properties put on the market in the Twin Cities than during the same week in 2007—a decline of 12.0 percent. And the number of new listings on the market in the last three months is 6.9 percent behind the same time one year ago. So while total inventory remains high, the frenzied peak of seller activity appears to be behind us.
The number of newly signed purchase agreements jumped significantly from the previous week; and for the same time period comparison last year was down only 8.9 percent. While this is a positive indication that buyers may be beginning to recognize the tremendous opportunities available, we are by no means out of the woods yet. Let’s at least hope we’re out of the snow.
The National Association of Realtors published its monthly sales data and reported that sales actually increased from January to February. Apparently many prognosticators and forecasters were looking for a decrease. I would hope we’ll continue to see month over month increases as we move all the way to summer.
What the headlines don’t say is that sales volume is down 23% compared to the same period last year and home prices are down 8%.
It’s not rocket science, and I have said this time and time again…if we want to get this housing market turned around, sellers need to lower their prices and we’ll see sales activity pick up which will have a massive ripple effect throughout the economy.
Calculated Risk has a good analysis on the data released today. This chart below shows just how far sales volume has fallen in ’08 compared to ’07.
Calculated Risk has built a nice chart of housing inventory:
 
There is no way we’re going to lower the inventory levels without having a sale. Think Macys. Think Ford. When they need to move traffic, they have a sale.
“With today’s overload of houses, buyers have plenty to pick from — more in some price ranges, less in others.” This is the first of many stories to come where the media will finally understand that there are many, many opportunities for buyers out there in this market.
Lynn Underwood spoke to me about a week and a half ago for this story. She quotes me as follows:
John Murphy, Edina Realty sales agent, said that in his experience, some owners of houses priced under $250,000 can’t afford their mortgage and are trying to sell.
Where will you find the most options? Million-dollar-plus homes show the deepest inventory at 20 months, but upper-bracket properties always take longer to sell and have a smaller pool of buyers. Even if those houses don’t sell, the owners are more likely to still buy a second house because many have the financial means to own both properties.
“Sellers in that price range may be able to hang onto homes longer and weather the storm,” Murphy said.
It’s anyone’s guess how long it will it take for the housing surplus to shrink, and supply and demand to balance out. But Murphy doesn’t see a turnaround anytime soon.
“With inventory still 10 to 12 percent higher than it was one year ago, and pending sales activity down typically 15 to 25 percent depending on the week, it doesn’t look like a turn to me.”
Although the number of houses for sale is still at record levels, new listings are being added more slowly. The number of new listings the week ending March 8 is down 10 percent from last year. For the first three months of this year, new listings have dropped 5.6 percent when compared to last year.
What’s it going to take to burn off some of that existing inventory? Sellers can do their part by making sure houses are in “model-home” condition and aggressively priced to move.
“Sellers have to price realistically according to market conditions, which many still are reluctant to do,” Murphy said.
Lenders and banks can help by speeding up the selling process of the growing number of distressed and foreclosed properties, he said.
“It’s not uncommon for it to take 30 to 60 days to hear back from a bank on an offer,” said Murphy. “The faster they respond, the faster we can move through all the bank-owned property and help get this market back on its feet.”
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I sense a slight change afoot in the way the media covers the “U.S. Housing Crash.” I am already starting to see it with some slightly positive stories that are beginning to appear on TV programs and news websites like this one.
There are fabulous opportunities for buyers out there right now, but the media has scared the hell out of people. It’s more than a little frightening to think of the power and influence we have allowed the media to have in our lives in America. Do people not know that there is both a political and a business agenda behind the news stories they consume?
For the past two years, all we’ve heard about is the doom and gloom and the ever spiraling collapse of the housing market. Soon you will start to hear about the opportunistic buyers and investors who step back in to the market.
I believe there are thousands and thousands of people who are trying to bottom pick the housing market. There won’t be a bell that rings when we’re at bottom. By the time you see a turn up in the sales statistics and the better sounding news reports from the media, the bottom in the housing market will be long gone.
I had the displeasure of watching some network television this weekend as well as do some general business reading over the Easter weekend. Listening and reading several sources in the media, it’s clear that the group think there is that the U.S. is currently in a recession.
I am now constantly hearing things like “this tough economy,” “difficult economic times,” “how long will the recession last?”  Perhaps all these prognosticators are right, but count me as a doubting Thomas until I see the data.  There are many industries that are continuing to plug along nicely. Yes, housing and the construction markets are down big and retail is showing some signs of softness, but U.S. manufacturing continues at a nice pace and the fields of technology and agribusiness are doing just fine, thank you.
Perhaps the media says the U.S. is in recession because they are in a recession or their own downturn. Perhaps it’s not a recession, but a fundamental change in which advertisers reach prospective buyers?
We are in an election year and there are many in the media that want to see a Democrat in the White House. The drumbeat of bad news will likely continue for several more months until their man or woman is in the White House.
The Federal Home Loan Bank System just approved the purchased of another $100 billion in Fannie Mae and Freddie Mac backed mortgages. If the Federal Home Loan Banks take off the books another $100 billion from Fannie and Freddie, that of course frees up Fannie and Freddie to purchase another $100 billion in mortgage backed securities. This is on top of the $200 billion OFHEO authorized late last week…see this earlier post.
Liquidity is coming back to the market…only time will tell if it’s too little too late.
