Many Believe Real Estate Recovery is Under Way
By Bernice Ross, Monday, May 11, 2009
The markets still may be frosty, but there are plenty of signs that the deep freeze in the real estate market may be beginning to thaw.
If the experts say it’s so …
Is the real estate market slowly moving towards recovery? A number of experts seem to think so.
After reviewing the latest data on home sales, construction and consumer spending, Ben Bernanke, chairman of the Federal Reserve, observed that the economy is improving.
Frank Nothaft, vice president and chief economist for Freddie Mac, stated, “The housing industry is starting to exhibit some positive signs.”
According to the National Association of Home Builders, “Homebuilder confidence in April rose to the highest levels since last September.”
NAR: Prices up as sales decline
NAR reported in April that the rate of sales declined by 3 percent while prices increased during the last month by 4.2 percent — with the median price increasing from $168,200 in February to $175,200 in March (it’s important to note that the median resale price was down 12.4 percent compared to March 2008). While it may not feel like a recovery quite yet, there are some positive signs. The first part of a recovery is typically marked by prices stabilizing. The market will flatten and sputter along instead of continuing to decline. Unit sales are generally the leading indicator. The inventory must be absorbed before price stabilization can occur.
Real estate Web sites see increased traffic
Alexa.com, a site owned and operated by Amazon.com, allows you to track and compare Web site traffic. When you examine the “reach” statistics for several major real estate portals for the last six months, the numbers show that more people are visiting these sites.
Specifically, if you compare the numbers for major real estate search sites such as Realtor.com, Trulia.com and Zillow.com, there is a clear pattern in terms of Web views. The Web visitor statistics hit bottom in November and December of 2008, and then began to increase in January. There was a dip during the middle of March followed by a major spike in activity for all three sites in April. NAR statistics show that more than 90 percent of all buyers today go online as part of their search process. This increase in the number of people searching on major real estate portals bodes well for more sales later this year.
Increased numbers of purchase-loan applications
The National Bankers Association reported that since the end of February 2009, the number of loan applications has increased by 22 percent. With interest rates hovering around 5 percent, home affordability is at the best level since tracking began back in 1971.
Open house and multiple-offer activity increase
Avram Goldman, president of Pacific Union, blogged that during the first week of April 2009, San Francisco Bay Area home sales “were up over 30 percent” compared to the same time period in 2008. “This was the best week since July of last year.” Areas in San Francisco and Marin counties, where prices declined by 30 percent, have experienced an increase in pending and sold sales. He also reported on one home that received 17 offers! His take is that California may finally be on its way to a recovery in 2009.
The number of properties with foreclosure filings declines
According to RealtyTrac’s numbers comparing foreclosure rates from first-quarter 2009 with fourth-quarter 2008, 23 states experienced a decline in the number of foreclosure filings. What’s notable is that many of the hardest-hit states are starting to see an improvement. For example, Florida still ranks as one of the top states in terms of the number of properties in foreclosure. Nevertheless, almost all major metropolitan areas in Florida reported declines in the number of foreclosure filings. Statewide, foreclosure filings declined 12.19 percent.
Other hard-hit states experiencing a decline in foreclosure rates include Colorado (-13.84 percent), Indiana (-6.01 percent), Michigan (-1.98 percent), and Ohio (-3.14 percent). Unfortunately for California and Nevada, the number of foreclosure filings continues to increase, even in areas where unit sales are up.
Clearly, there are still major challenges ahead. Nevertheless, more Web visitors to real estate Web portals, more mortgage applications, fewer foreclosures, more open house visitors, the return of multiple offers, and a loosening of credit all bode well for a real estate recovery. With a little bit of luck, perhaps the bottom of this market is already in back of us.