“Every Single Thing About Housing Is Flashing Green”
These were the words used by J.P.Morgan CEO, Jamie Dimon, in a recent interview with CNBC. Dimon pointed out that housing formation was up, inventory down and housing affordability was at an all-time high.
In my mid-year 2011 Marblehead Reporter review I wrote: The biggest restraining factor today is probably confidence, or the lack thereof.”
The following news items indicate that confidence is returning to the real estate market across the country. And on November 20, 2012 Federal Reserve Chairman Ben Bernanke, in a speech in New York, said: “The housing market has shown some clear signs of improvement, as home sales, prices and construction have all moved up since early this year.”
I receive daily email alerts on housing news throughout the country and these reports all confirm what Dimon said. Here are some recent examples:
– Southern California’s housing market continued to gain traction last month as the region’s median home price rose by more than 16 percent, home sales grew by 25 percent and foreclosure resales hit a five-year low. Los Angeles City and Press, November 19, 2012.
A recent Bloomberg article stated: “California, the state that led the U.S. into the housing boom and bust with some of the most reckless subprime mortgage lending, is now leading the way out.”
– New home sales in Las Vegas are up 62 percent and building permits have nearly tripled since last year as the supply of existing homes remains tight. The median sales price for a new home was nearly $217,000 in October, up 10 percent year-over-year. AP Press November 23, 2012
– Home sales in Connecticut and every other state in New England rose strongly in October compared with a year earlier, RE/MAX of New England reported this week. Massachusetts unit sales rose 25.5 percent while median price climbed 4.2 percent, both fourth highest regionwide. Norwich Bulletin, November 23, 2012
Let’s look at recent news by category:
Existing home sales in October sold at a seasonally adjusted annual rate of 4.79 million units, on track to reach the highest level since 2007. October sales were up 10.9% from October 2011 and it was the 16th consecutive month of year-over-year sales increases. Wall Street Journal, November 19, 2012
Housing starts in October unexpectedly rose to a 4 year high. New starts were at an annual rate of 894,000, the best since July 2008, compared with a median forecast in a Bloomberg survey of 840,000. Bloomberg, November 20, 2012
The national median home price in October rose 11.1% from a year ago. A “good portion” of the rise was attributed to a 40% plus increase in sales of homes over $500,000. The NAR expects that repeat indexes such as Case-Shiller, FHFA and CoreLogic, will report larger increase in the months ahead. With the inventory shortage (see below) likely to continue through 2013, the NAR expects price increases in the mid to high single digits next year. National Association of Realtors (NAR), November 19, 2012
Median home prices have risen for eight consecutive months for the first time since early 2006, in part due to a 53% increase compared with a year ago of sales of homes between $750,000 and $1 million. Wall Street Journal November 19, 2012
Inventory at the end of October was 2.14 million homes, down 22% from a year ago and represented just 5.4 months of sales, the lowest level since February 2006. This level is likely to trend down over the next four months because of seasonal factors. The NAR believes that new home starts need to double from current levels to keep up with new household formation. NAR
Homeowners’ equity increased by $760 billion in the first half of the year and is likely to increase by $1 trillion for the full year.NAR
Median Days on Market in October was 71 days, with 32% of listings selling within one month. CoreLogic, The MarketPulse, November13, 2012
An index of home builder sentiment increased for the seventh consecutive month and reached the highest level since May 2006. National Association of Home Builders, November 19, 2012
Luxury homes: “We’re in a strong phase of the recovery. It’s a function of five years of pent-up demand being released. Affordability and rising prices is also spurring people to buy.” Martin Connor, CFO, Toll Brothers, “America’s Luxury Homebuilder”, November 15, 2012
Distressed sales (Bank-owned and short sales) declined in September to 20% of total sales nationwide, the lowest level since the start of the housing crisis and down from 33% in early 2011. The year over year 90 days plus delinquency rate has now declined for 23 consecutive months. CoreLogic, The MarketPulse, November 13, 2012
Conclusion: It is increasingly clear that there is an improving housing market across the country. There are still challenges, ranging from the fiscal cliff to the fact that mortgage credit is tight, but all the evidence points to continuing improvement. While there is plenty of talk about the “shadow inventory” of possible foreclosures, less mentioned is the pent up demand from those who have not bought in the last few years.
Whether you are considering buying or thinking about making a move I’d be happy to discuss your desires with you and provide you a detailed analysis of the market in your price range.
Andrew Oliver 781.631.1223 or [email protected]
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