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Aug 12

Housing market seems to have turned… After seven years of pain, now comes the gain

Nearly seven years after the housing bubble burst, most indexes of home prices are bending up. Don’t take my word for it! Check the info below about the nation and Seattle, plus the additional references at the end.

(Photo: Bloomberg News)

NAR June Housing Report

The June report from the National Association of Realtors revealed that 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point in the large housing market.

The number of homes that are vacant is at its lowest level since 2006.

A low supply of homes for sales is driving up prices

Though many home shoppers who assume they are still in a buyer’s market find it hard to believe, one of the sobering fundamentals shaping real estate this summer is shrinking inventory: total houses listed for sale across the country in June were 24% lower than in 2011. (National Association of Realtors)

And that is having important side impacts — raising prices and homeowners’ equity stakes, and reducing total sales.

In major metropolitan markets across the nation, the stock of homes listed for purchase is down by sometimes extraordinary amounts — 50 percent or more below year-ago levels in several areas of California.

In Los Angeles, available inventory is 49% lower than it was last summer, San Diego by 53%, and in Seattle, listings are off by 41%.

In its latest survey of 146 large markets, Realtor.com found that 144 had lower supplies of listings last month than a year earlier.

Just south of San Francisco, agent Brad Le says inventory in Silicon Valley is down so drastically — and demand so strong — that the bidding wars are spinning off the charts… “We’re not just talking about 10 or 15 offers, he says, “but sometimes 40 and 50.” (It’s a good time to be a seller)

Hardest hit in bust have biggest decline in homes for sale

Online real-estate and mortgage data firm Zillow, also based in Seattle, reports that some of the steepest declines in current inventory of homes for sale are in places that got hit the hardest during the bust, and where sizable percentages of owners still are underwater on their mortgages.

In Phoenix and Miami, for example, 55 percent and 46 percent of owners respectively have negative equity.

Both cities have seen significant drops in inventory, and both are experiencing strong appreciation in home prices.

S&P/Case-Shiller May index up for nation and for Seattle

According to the S&P, the 10- and 20-city home price composites were each up 2.2% for the month and recorded respective annual rates of decline of 1% and 0.7%, compared to May 2011.

“While still negative, these annual changes are the best we’ve since in at least 18 months,” said the S&P.

The S&P/Case-Shiller monthly index covers roughly half of U.S. homes  measuring prices compared with those in January 2000 and creating a three-month moving average. The May figures, the latest available, indicate that the housing market is recovering, but at a slow and uneven pace.

Even with the gains, the index is 33 percent below its peak reached in the summer of 2006, at the height of the housing boom. Based on the 20-city index, home prices are now at about the same level as in early 2003.

Chicago, Atlanta and San Francisco posted the biggest May increases, at 4.5 to 3.9 percent. Minneapolis was next, followed by Seattle and Portland.

Seattle home prices up…

Seattle home prices rose 2.6 percent from April to May, in line with a national trend that lifted home prices in all 20 metropolitan areas tracked by the Standard & Poor’s/Case-Shiller home price index. May’s increase was Chase-Shiller’s second monthly increase for Seattle-area home prices after seven straight months of decline, putting local prices 0.6 percent higher than they were a year ago… Albeit, not much, but the direction is good: up versus down.

June’s reading is slightly below the level set in both March and May of this year. But it is better than any reading in 2011 and better than all but two months in 2010, when federal tax credits spurred a burst of sales activity. It was the highest level for the month of June since 2007.

An unknown factor is future meaningful job and wage growth which has slowed in recent months and without which a recovery will have trouble taking hold.

Builders resume building

Builders are getting more confident, partly because they are seeing more interest from potential buyers. Builders broke ground in June on the most new homes and apartments in four years.

More News…

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