The amount of news on the housing front over the last week or so is staggering. If you’re keeping up with the articles I share, you’re on top of the game. (If you use an RSS reader, use this feed…) However, I wanted to add a little to the mix of articles and organize them to get a better picture of what is happening.
Home Prices
Home prices continue their downward trend. Prices in Atlanta have declined 15.7% from May 2008 to now. They have also lost 1.7% since February. Atlanta continues to “perform” better than most of the other major markets except a select few.
The Case Shiller index shows Atlanta stands at about 105. That means that homes have only appreciated 5% since January 2000. This puts Altanta near the bottom of housing appreciation of the 20 major markets that Case Shiller tracks. Only Cleveland (96) and Detroit (71) have performed worse over the past nine years. That’s fairly poor – other southeast cities that the index tracks are Charlotte (119) and Miami (149) have fared significantly better.
Despite the pessimism of the Case Shiller numbers for Atlanta, Steve Palm of SmartNumbers told the AJC that home prices hit a bottom in February.
“Case-Shiller is a great survey, but you just can’t read too much into that,” said Steve Palm, president of SmartNumbers, a real estate research firm in Marietta. “February was still the bottom, and I say that because we have every [home loan] closing tracked, so I know February was the bottom.”
Palm said the average April sale price was up $10,000 over March, which is “a very good sign.”
Finally, the National Association of Realtors says that homes are now undervalued. Be careful, though, how much stock you put into NAR’s information. I’ve included a link to their information just to be complete – I’m very skeptical of anything that NAR puts out.
There is also concern that the home price trend is now pushing into “formerly stable markets”. (Stable markets is the WSJ’s term – not mine. Sounds like an oxymoron to me.) This was inevitable, though. Overall, economist Phil Dales expects housing prices to drop another 5-10% yet.
Home Sales
Despite Georgia having the lowest mortgage rates in the country, and rates overall are practically the lowest they have ever been, economist John Lonski says they aren’t low enough to bring equilbrium in the market.
However, home sales in April were up 2.9% over March.
“Most of the sales are taking place in lower price ranges and activity is beginning to pick up in the midprice ranges, but high-end home sales remain sluggish,” said NAR chief economist Lawrence Yun. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.”
The number of first time buyers declined to 40 percent in April, a sign that NAR says indicates more repeat buyers are getting back into the market. And the number of people actively looking for a home to buy is up 14 percent from a year ago.
This article in the Wall Street Journal has reactions from a number of economists on the housing market, including a lot of very good data – too numerous to reprint here. There is a concern that we may have hit a false bottom in housing however, as foreclosures were up 40% from March in April in California. The always optimistic NAR says that home sales will bottom in the second quarter of this year.
Home Construction
Looking at bad news optimistically, home builder confidence rose in April from March from 12 to 14. While it did rise, anything under 50 indicates that market conditions are poor. Builder expectations over the next six months rose from 24 to 27.
Home construction in general has gone down significantly from even last year. Generally, permits and starts are down for April 2009 about 50%. The number of “Zombie Subdivisions” is a major concern too – with lot inventory so high that even in the usually stable coastal markets along the east coast, they’re at least a couple of years away from seeing shovels and hammers.
Again, this article in the WSJ has a ton of data on home construction and is very much worth the read. Real estate investor Sam Zell sees the recovery happening this summer because of demand returning. In support of that, at least one firm expects a big recovery in housing because new construction is off so much that demand is going to out pace supply very soon.
Bottom Line
I would strongly reccomend reading the linked articles and drawing your own conclusions on housing market. There is an incredible amount of information there – too much to even summarize here.
