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|“Something’s up down here,” my friend told me over the weekend.|
“Right now, I’m unable to buy a distressed property,” he said. He’s been trying to buy quality properties where he can get a good price – properties like bank-owned real estate, foreclosures, short sales, and such – in Central Florida.
But lately, he simply can’t do it.
“It seems like the realtors and the big investors are tied up with each other,” he explained.
“These properties are disappearing from the market before they’re even on the market. And for the ones that DO make it to the market, the bids I’ve made on Day One – even above asking price – haven’t been accepted.”
I think this is interesting…
It’s anecdotal evidence of what I believe is happening right now. I believe the signals are telling us the housing market is finding its “clearing price” right now…
This is it. This is the bottom. There are plenty of buyers at this moment to match the sellers. The latest stories from my friend – combined with the most recent data and the “leading indicators” – tell me the bottom should be in… or very close.
As a leading indicator, something I find interesting is the dramatic rise in home-improvement stocks, like Home Depot and Lowes. Home Depot is now at 10-year highs. When a stock is hitting 10-year highs, whatever was troubling it before is over…
Stock-price activity often leads economic activity… So is the dramatic risk in home-improvement and homebuilding stocks wishful thinking from stock traders? Or is the rise in these shares leading economic activity in housing?
I think this is legit… The latest data backs that up…
Yesterday, Bloomberg News reported, “Confidence Among U.S. Homebuilders Climbs to Highest Since 2007.”
Bloomberg said, “Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved… Record-low borrowing costs, a growing population, and reduced prices may drive demand for homes this year…”
Another simple piece of data where you can see some improvement is in building permits issued for single-family homes. And it’s not rocket science… If you’re going to have a recovery in housing, you need a recovery in building permits. It’s the first step to building a new house.
Building permits bottomed out three years ago. But they’ve been recovering:
The recovery in permits is not huge. But we are still off the lows of three years ago. It’s a move in the right direction.
I could go on… The general picture is that consumer confidence is rebounding. Things are getting less bad.
The official statistics of home prices might not show the recovery yet… because they are always MONTHS old. But I strongly believe the bottom is in, right now. Today.
We are seeing the exact same conditions here in the Treasure Valley. The number of houses available continues to decrease. At the end of December our total active inventory was 1,991 homes. This is down 9% from November and 25% less than last year at this time. Our inventory has fallen below where we would call the market “in equilibrium”. We are now in a “shortage”.
At the same time, the percentage of distressed active inventory held steady at 36%. We have been hovering between 33% and 36% since May. We remain well below the 40% levels set last spring….when we were on the increase.
In Ada County we have 4.2 months of inventory on hand…historically this number defines a strong “seller’s market”. The price category in shortest supply is <$119,000 with 2.5 months. In the range of $120,000 to $159,999 we have 3.9 months. All price points up to $400,000 have less than 5 moths supply. We have benefited all year from inventory levels much lower than national average. now, however, we are starting to see some slowdown in sales as the inventory continues to fall.
Based on December sold data, our most desirable price point is $120,000 to $160,000 which made up more than 20% of total sales.
There is no longer any doubt that, in Ada County, we have passed our “low water” point. The challenge to our continued recovery is available product.
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