by Dan Krell
As the housing market expectantly slows for the winter months, we can start reflecting on this year’s housing statistics. Home sale figures appear to point to a year ending slightly better than last. But it may be that local home sale stats may not best those posted during the 2009-2010 period. It appears that there are missing pieces to the housing market, which if not put into place, could result in a new real estate norm. Let’s take a look at the puzzle…
First, the National Association of Realtors® (Realtor.org) reported that national pending home sales have been elevated most of the year; and although national existing home sales have increased during October, the numbers fluctuated throughout the year. Of course, trying to determine the local state of housing through the national market snapshot may be like trying to see a local road map by looking at the solar system; but there is truth to what NAR Chief Economist Lawrence Yun described as “…rising consumer confidence about home buying…”
Second, New home sales have increased compared to last year. Although the existing home sales statistics reported by the NAR may have co-mingled some new home figures in the data (due to the methodology), the U.S. Census Bureau (census.gov/construction/nrs/) reports new home sales. Not surprisingly, October new home sales increased about 17% compared to October 2011, and 2012 year to date new home sales increased about 20% compared to 2011.
A forthcoming piece to the puzzle, which may likely be reported in the latter weeks of December, is that November was another positive month for real estate. And more importantly – November may have been a brilliant month locally. A preliminary analysis of Montgomery County MLS (Metropolitan Regional Information Systems, Inc.) home sale figures (all inclusive) point to a marked sales volume increase in November compared to November 2011, as well as an increase in the average monthly home sale price (dankrell.com/realestate).
Another piece to the local real estate puzzle is home buyer behavior. Home buyers in the market are increasingly demanding about what they are getting for their money. Given the lack of home listings in the resale market (down about 27% from 2011 year to date through October for Montgomery County single family homes: gcaar.com), combined with variances in home sale prices and the cost for renovations and updates on many homes; home buyers perceive value in purchasing new homes compared to buying a resale in today’s market. This is an unacknowledged reason for the surge of new home sales this year, and why new home builders have rebounded before the resale market.
The missing pieces to improving the resale market are inventory and home prices. As mentioned, a lack of home inventory continues. If resale inventory were to match those of previous years, it stands to reason that resale inventory would also increase. Inventories are lackluster most likely because many home owners have put their selling plans on hold until they are convinced that home prices have stabilized.
It’s welcome news that the 2012 housing market is slightly better than the 2011. And although the landscape of the local market has improved, home sale figures are not much better than those posted during 2009-2010. If resale inventory does not increase, the resale market of 2013 will probably be much like that of 2012.
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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 3, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.