Whether you consider real estate news to be good news or bad news, it’s always good to watch the news! By keeping track of trends in real estate sales and pricing, wise investors know when the time is right to buy, and when the market is ripe for a profitable sale.
According to a 2011 National Association of REALTORS® second quarter report, “Median existing-home prices declined modestly in the second quarter with 27 percent of metropolitan areas experiencing price gains from a year ago.” State home sales declined from the second quarter of 2010. It’s not exactly the news we wanted to hear, but it’s nice to know right where we stand.
Lawrence Yun is NAR chief economist. He analysis reports and helps put them into terms even those of us who are statisticians can understand. He said median home prices are definitely moving up and down. However, the range is fairly narrow and we’re even seeing some markets stabilizing. A solid labor market seems to be a common factor where market conditions are stabilizing, according to Yun.
It’s important to remember there are still a lot of foreclosures and short sales on the market out there. Yun has pointed out the sales of bargain properties can artificially depress the median home prices. It helps to look at the annual numbers to see how the roller coaster trends of individual quarters smooth out over time.
Yun has noted some favorable factors that can assist the real estate market recovery:
- Historically low mortgage interest rates
- High housing affordability
- Rising rents
Household Purchasing Power Strengthens
The NAR Housing Affordability Index is at 176.6 (Q2, 2011). That’s reported to be the third highest on record following Q1, 2011 and Q4, 2011. Think of the index as a thermometer. It measures the “relationship between median home price, median family income and mortgage interest rates.” When the number is higher, families have more household purchasing power.
NAR President Ron Phipps is broker-president of Phipps Realty in Warwick, R.I. In an Aug. 10, 2011 press release Phipps cites credit access as a key element to a healthy housing market, “It’s frustrating for many creditworthy potential home buyers to realize that when they’re ready to make a move, banks remain risk averse,” he said. “People with good jobs, long-term plans and who are willing to stay well within their means deserve an opportunity to realize their American dream of home ownership. When banks return to normal and safe but sensible lending standards, housing will be able to contribute its traditional share to economic growth.”
I could throw a ton of numbers at you here, but instead I’ll refer you to the formal NAR report online.
These reports might seem confusing at first, but as you study them and study them more often, you will begin to understand how the market moves and shifts.
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