Real Estate Rebound

Mark Perry proves “why” the latest real estate numbers are positive:

MP: That’s one way to look at it. Here are some alternative views:

1. The April to May increases in median home prices (3.84%) and mean home prices (3.26%) were the largest monthly price increases in more than a year (data here).

2. The monthly May increase in both median home prices (3.84%) and homes sold (2.36%) was only the second time in at least a year that both prices and unit sales increased in the same month.

3. The back-to-back increase in home sales in both April and May is the first time in at least a year of two consecutive monthly increases.

4. The most recent two-month increase in sales of 4.84% is the largest since April 2004 (source).

5. The 9.6 months supply of inventory in May is below last year’s May level of 10.9 months by more than five weeks, and is at the second-lowest level in the last year.


11 Responses to “Real Estate Rebound”

  1. 1 erica cardenas June 23, 2009 at 9:59 PM

    These numbers are amazing but I can state that from my experience they are true. I started looking for a new home to purchase in Jan. of this year and when I started looking there was plenty of homes available in Rohnert Park, CA in the lower 200’s. Currently, I went to look at a home in Rohnert Park, CA that has only been on the market for one day and it already had seven offers. All the homes in the lower 200’s price range are flying off the market, which I find truly amazing because just a few month’s ago there was many homes within that price range available.

  2. 2 Abby June 24, 2009 at 5:43 PM

    Yes, the drastic drop in prices has led to an increase in existing-home sales on the lower end of real estate prices. BUT new-home sales fell in May because people are turning to these cheaper options, pushing up existing-home sales. In other words, there is a surplus of used homes that is driving prices down and demand up. In numbers, May 2009’s home sales were 32.8% than the level in May 2008, according to the WSJ.

    This optimism over the increase in home sales is valid, yet the big picture is still dismal. Perry is focusing on the narrower existing-home market, but the overall housing market is still in the dumps. Similarly, mortgage rates have become more affordable, but the average 30-year mortgage has climbed. Thus, immediate mortgage payments are more affordable, but in a longer time period, average rates are still high. Until enough time has passed with low rates, average rates will remain elevated.

    Looking beyond these month-to-month swing, inevitably it will be a long and difficult climb back to a healthy housing market.

  3. 3 Jessica Tsai June 25, 2009 at 9:42 PM

    Perry’s viewpoint makes several valid points regarding the housing situation today. In fact, just recently, a close friend of mine decided to purchase a house near my hometown of San Ramon, which is generally known as a upscale suburban neighborhood. She is still unmarried and just turned 25 so it is a pretty big step for her, especially to be able to afford such a purchase. However, although Perry adopts an optimistic view on the real estate market, his perspective is by no means reflective of the entire situation today. Many people have indeed taken advantage of the lower pricetags on homes and chosen to purchase property recently, but the overall outlook of the housing market is still grim. While mortgages have gone down, there are still many households that cannot afford to make these payments and there is still quite a bit of progress necessary to mend the real estate market.

  4. 4 Evangelina Alvarez June 25, 2009 at 10:23 PM

    My mother just sold her house for $354,000 which I would consider a median priced home. Although, when she began trying to sell it in may, it was low ballers only making the offers. Then suddenly, before she almost rented it out she got a decent offer in the beginning of june. It is a sign of the times though, people are only buying what they can afford. I know that many first time home buyers are interested and have been for the past several months in making their purchases but sales have truly increased only in the past couple of months. I do believe first time buyers are a good share of the homes being purchased as I know two couples who just bought their first homes as well. There has been a house about 5 down from my moms that they have tried to sell for maybe one-million, and it has been on and off the market for about 3 years. They have made nice additions to the house and definitely made it worth more, but not quite one million and no one is willing to pay that much in Napa during the economic situation.

  5. 5 Dave Stevenson June 26, 2009 at 11:50 PM

    I think it’s kind of a double edged sword right now. Sure, there are a ton of deals on the low end of the market, mainly REO’s and foreclosures that the banks need to clear, and a lot of great deals out there (just bought my third home in Jan of this year). However, the flip side to that are the larger, pricier homes. They are still in price/value decline. The home I bought in Jan has lost over 60k in value in the last 5 months.

    I think this recovery, which is a ways out still, will actually come from the bottom up. All of the lower-than-average priced homes will be eaten up quickly (as we are starting to see) which will slowly increase the demand for the mid-range, then work it’s way up. Great time to buy a house, especially first timers right now….

  6. 6 Dominic Recella June 27, 2009 at 8:55 PM

    Homes are becoming cheaper and cheaper in some areas, which is very surprising. Now is the time to start investing in a house because even most houses cost as much as an apartment.

  7. 7 wongt June 28, 2009 at 4:57 PM

    When you look at the cycle during the downs in Real Estate markets, its usually about 8 years before things start to go back up. So all these small spikes in home prices aren’t going to climb steadily. Its going to be a while before things go back to “normal,” but this is a good opportunity for some.

  8. 8 Hong Truong July 4, 2009 at 10:16 AM

    Maybe someone can fill me in. I keep hearing the economy is bad so do not buy a home right now. However I am not understanding this logic. And there may be very good reasons………….that I do not realize, so I am wondering if you can help me out.

    Unless your job is at risk, I just do not get the mind set of not buying now.

    Interest rates are still very good, the inventory of homes are great and the BARGAINS are awesome. Is there an impression that when the economy get better, that these issues will get even better? I think when the economy gets better……………the opportunity to buy low and with a great interest rate will not be so good. And that the special home buying programs will go away. (as we have seen many go away thus far, and the ones left will too, mark my words)

    Home sales help improve the economy. So if you have a stable job, and are renting a place and can get approved for a home loan, why are you not doing so?

    I am not writing this to convince you to buy, I really do want to understand the mind set and what buyers are thinking.

    So, 1st time home buyers, please explain…………..I want to hear your opinion!

  9. 9 Tanisha/ Econ 100 July 9, 2009 at 11:36 AM

    It is a great opportunity to purchases houses right now. Old houses more so than new houses, but they are all cheap. There are prices that range from 100s to 200s that people are taking advantage of. Especially first time home owners; they will purchase a house and fix it up. This makes the house worth more, eventhough they were only able to purchase it according to their budget.

  10. 10 Joseph Garcia August 4, 2009 at 12:21 AM

    Looking at home prices, I’ve seen homes that were once around $650,000 drop to as low as $300,000 in this short period of time. It’s shocking to know that the same has happened to mine as well, but I know that everyone is feeling the slump of the housing market. It’s good to know that our homes are gaining some value back and some people are getting a home when they could not before.

  11. 11 Patrick Powers August 6, 2009 at 3:29 PM

    Dominic that was a pretty broad comment, but I tend to agree with you. For those that have the money, they should be putting it into investments of these cheap houses. Although its not as easy as it sounds, the market will soon become more stable than it currently is. And about the positive signs of April and May, this doesnt prove much that we are getting closer to stabalizing, as April and May are always prime months for people to be buying homes anyways.

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