Is The Real Estate Recovery Finally Upon Us?
For more than couple of years now we have all been asking ourselves the same question. Is the real estate recovery finally upon us? Despite a variety of mixed signals this has been one trend that is technically too close to call. However, an in-depth look at the numbers through the end of April 2012 it appears to show that we may have not only reached the bottom but are in fact making great progress towards a sustained recovery.
Existing-home sales and median sales prices continue to rise and remain above levels attained one-year ago. Meanwhile the rate of foreclosures and the level of total inventory ticked downward. Mortgage rates have continued to hit record lows making the lending environment extremely favourable for those in the market who qualify. These noted improvements were also broad-based across all regions.
Total existing-home sales, which are defined as transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4% percent to a seasonally adjusted annual rate of 4.62 million. That represents a 10.0% percent increase over 4.20 million-unit level reported in April 2011. Lawrence Yun, NAR chief economist, said the housing recovery is underway.
“It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said. “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”
Single-family home sales rose 3.0% to a seasonally adjusted annual rate of 4.09 million in April from 3.97 million in March and are 9.9% percent higher than the 3.72 million-unit pace a year ago. The median existing single-family home price was $178,000 in April, up 10.4% from April 2011.
Existing condominium and co-op sales increased 6.0% to a seasonally adjusted annual rate of 530,000 in April from 500,000 in March, and are 10.4% above the 480,000-unit level achieved in April 2011. The median existing condo price was $172,900 in April, which is 8.1% above a year ago.
In regards to housing inventory the end of April saw a 9.5% rise to 2.54 million existing homes available for sale. This represents a 6.6-month supply at the current sales rate, up from a 6.2-month supply reported in March. Listed inventory is 20.6% below a year ago when there was a 9.1-month supply. A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions
Median Sales Prices
The national existing-home median sales price across all housing classes jumped 10.1% to $177,400 in April from a year ago. This corresponds with the March price improvement of 3.1% and represents the first time there have been d back-to-back priceincreases since June and July of 2010 when those gains were less than one percent.
Distressed homes, traditionally reported as foreclosures and short sales sold at deep discounts –accounted for 28% percent of April sales. That can further be broken down to 17% as foreclosures and 11% as short sales. This is down 1% from March and 37% from just a year ago. Foreclosures sold on average at 21% percent below market value while short sales were discounted by 14%.Mortgage RatesFreddie Mac reports the national average rate for a 30-year conventional fixed-rate mortgage declined to 3.91% in April from 3.95 percent in March; the rate was 4.84 percent in April 2011. Last week the 30-year fixed rate dropped to an all-time record weekly low of 3.79%since record keeping began in 1971.
Distribution Of Purchases
First-time buyers rose to 35% percent of all purchasers in April from 33% in March First time home buyers were 36% percent in April 2011. All-cash sales fell to 29% of transactions in April from 32% in March; they were 31% in April 2011. Investors, who account for the bulk of cash sales, purchased 20% of homes in April, compared with 21% percent in March and 20% percent in April 2011.