Housing Prices – Are They Going Up, Down or All Around
One of the biggest questions I get asked is where are home prices headed. It seems like everyone has a different answer according to what they saw on TV, read in the paper or heard from their friends or family. I cannot say exactly where we will be later this year but one thing is most likely, prices overall will drop. This is caused by a continued upswing in foreclosure bound properties like short sales. Short sales will be the leader in housing inventory uptick. Bank owned properties will stay steady as will standard sales, those real estate sales with equity. Although standard sales will thin out as more and more equity sellers move and are replaced by non or little equity buyers becoming homeowners. But here’s the kicker. If we can sift through and drop the number of foreclosures bound properties, this will normalize the market and keep prices at current levels.
This is a great article published today from the Housing Matrix.
The National Association of Realtors (NAR) reported that the number of signed purchase contracts for existing homes rose. Their index rose 3.5% in November. Even though the index remains 5.0% below its November 2009 The NAR’s Pending Home Sales Index took a steep dive following the expiration of the homebuyer tax credit in April.
Post-Tax Break Bounce Back
This is a sign that housing is regaining its health, even though the index remains 5.0% below its November 2009 measurement. This indicates that home sales are recovering without direct government stimulus. The NRA describes it as “a gradual recovery into 2011.”
The West posted the largest month-over-month jump of 18.2 percent, which is 0.4 percent above November 2009. The Northeast reported gains of 1.8 percent from a year earlier but is still 4.2 percent down from October. The South fell 1.8 percent while the Midwest declined 4.2 percent from October, according to the NAR.
What Caused the Increase?
Lawrence Yun, NAR chief economists, attributes this gain to an improvement in increased housing affordability, and overall economic improvements.
Will the Gain Continue?
“Further gains are needed to reach normal levels of sales activity…All the indicator trends are pointing to a gradual housing recover…Home price prospects will vary depending largely upon local job market conditions,” says Yun.
Looking Forward: How Will Home Prices Fair?
“The national median home price, however, is expected to remain very stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers…As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” according to Yun.