Fiction or Fact: The Housing Market is Improving
The media has been talking lately about the “improvements”in the real estate market. But how much of that is fiction or fact?
To get to the present, let’s look back at December 2011 when the NAR (National Association of Realtors) came forward (upon CoreLogic’s prompting) and said that they may have made mistakes on reporting data since 2007. Mistakes like inflating sales numbers up to 20% higher than they actually were. 20%? And keep in mind those inflations were taking place during the housing market RECESSION. So basically, as bad as those reports were from 2007-2011, in reality the market was EVEN WORSE.
The news lately is that the housing market is on the rise. Nealy EVERY DAY I am getting some article on the “rebounding economy and housing market”. Hmmm. Really?
I read in Nashville’s City Paper (very small article at the bottom of page 4) yesterday that housing prices fell 0.8% from February 2011 to February 2012 across the country, "stabilizing prices". I guess that’s good news? More like the “thank god it wasn’t any worse” kind of news. As for the housing market in the Greater Nashville Area, the author did go on to say that if you took all of the “distressed” (foreclosures and short sales) home sales OUT of the picture, then our housing market prices were actually UP 0.8%. Ok, THAT seems like good news, but let’s look a little closer. Upon putting the distressed home sales BACK into the equation, the prices were actually DOWN 0.7% during that time period.
So when the national news talks about “housing market on the rise” that isn’t necessarily the whole story. With continual bombardment of positive news on the housing market, we the people are eating it up! We are so desperate for something to be improving, we will believe anything they say. Now let's look at the positives and negatives that are generated from these happy reports. Here’s what I see happening.
The market is improving, but with the next wave of foreclosures getting ready to hit the market, we’re not out of the woods yet.
Here’s what this means for those involved in the average real estate transaction:
1.Prices are depressed and buyers want to find a“deal” and, according to the news, this is the time to buy. Media: Buy Now, QUICK, Before the Prices Go Up!!Yet the state of their cash reserves calls for buyers to save money wherever they can. So they ask the sellers to pay their closing costs.
2.Sellers do not want to pay closing costs because it will mean that they may become upside down on their mortgage (if they weren't already) and will have to bring money to closing. But they are torn because they are desperate to sell.
3.Exacerbating the situation, there are loads of foreclosures and short sales on the market just sitting there waiting for an offer, further depressing both home sales and prices.
4.So the epic battle between buyer and seller continues. More often than not, the seller IS paying the closing costs, but still trying to call it a “win-win”situation because at least they are getting their houses sold.
5.There does seem to be one plus side: Those with more equity in their homes ($350k and up) are starting to make and receive offers with fewer days on the market.
In review, the continual drop in housing prices is slowing down, but the numbers are still in the negative. The number of home sales are slowly increasing. The media is providing us a source of positivity, albeit through giving us only part of the story. Buyers and Sellers are responding to the power of positive thinking. And, as a result, our nation may will itself back into a healthy housing market!