Wednesday, June 3, 2009

Things are not as they Appear: Just Look at the Details

I have been writing for several weeks about real estate trends around the country in different communities and markets. This analysis has been contrary to many reports and sources that have come out talking about national sales averages.

Standard & Poor's/Case-Shiller National Home Price index which was released just about on May 26 was interpreted as showing a decline in home prices.

My Seattle blog I posted on May 27 spoke to the fact that in the current market and with current trends, wide-sweeping analyses are not incredibly accurate. Given that many job losses are local or regional phenomena, sweeping analysis in the current climate reflect pretty much a useless scenario.

Southern California has some very stagnant real estate markets in the higher end communities. But the trends in the low end pricing and in some of the hardest hit areas for pricing have resulted in increased sales, overbidding of listing prices and multiple offers in the same market.

This is not to say that things are rosy all over or we are out of the woods, but there is definitely a positive trend that is defining a market bottom in many communities and starting to show turnaround trends.

This analysis has now been picked up by Associated Press as a quote from the CEO of one of the major home builders in the country: Hovnanian Enterprises. They reported decreased losses for the last quarter, and increases in pricing. Now if you analyze the areas in which Hovnanian has its communities in exactly some of the areas I have been talking about: in California, Riverside County as a whole, Beaumont and Sacramento; in Texas: Houston, Fort Worth; Charlotte, NC and many other areas across the country.

Statistics in this climate require a little deeper digging, scrutiny and careful analysis. As I've said in other blog posts, micro-markets will begin to fuel a turnaround that ultimately will translate to the overall market. However, the pattern will not be something we are used to seeing or be able to identify by looking at large, averaging indexes.

Examine your local markets carefully, even from neighborhood to neighborhood. The combination of incentives and low prices are producing a good climate for buyers who are financially secure and have reliable income. Recovery in the areas with the most job losses will not show a significant change until employment conditions change.

After all, it is still a better deal to pay $800 a month for a mortgage instead of $600 a month for rent.

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