Is the Residential Housing Market Turning ?
Front page news from the Wall Street Journal on Tuesday the 27th shows the largest monthly gain in existing home sales since 2002 !
Is this a sign of the beginning of the end of the free fall in the national housing market?
Sales of existing homes rose 6.5% in December over the November numbers. That is a massive uptick considering it occurred in what is traditionally one of the slowest sales month of the year. And the inventory of listed homes was down 7.5% from last year’s numbers. That’s the good news … here’s the bad news …
- 45% of the December transactions were considered “Distress Sales”.
- Home prices continue to fall nation wide and foreclosure rates are moving ever higher.
- No one knows the size of the “shadow market” of unsold homes that have been taken off the market because they did not sell in 2008. These homes will roll back into the listings once sales are clearly stronger.
And this beg’s the question, “What does the bottom look like?” What numbers would we see at the bottom … what is the pattern we are looking for?
Well it all has to do with Supply and Demand. And we are looking for the bottom, where Demand catches up with Supply. Where Sales Increase and Prices stabilize along with the Listed Property Supply numbers.
This looks like a false bottom because the underlying market forces are still pushing more discounted properties into a saturated market. Foreclosures are still rising. REO property inventories are still rising. The size of the shadow market of vacant but unlisted homes is anyone’s guess.
We will most likely see several of these false bottoms as increased sales brings a flush of the “Shadow dwelling” properties back into the Market. AND prices are likely to continue to fall in the near term … as painful as that may be to contemplate.
Stay Tuned …
Just for fun … here is the carnage of some of the Market Specific Sale Price numbers
- Las Vegas Home Sales Prices down an average of 26.8%
- Miami down 23.5%
- Phoenix down 22.3%
- Sacramento down 18.8%
- San Diego down 19.9%
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