We can’t blame ourselves if we’re not sure where the housing market is today when even the top economists are only venturing guesses or asking questions. Has the market truly reached bottom, or is it going to bounce around for a while longer, going nowhere?
How can we know whether we’re in a perfect storm for selling or buying when each new advisory seems like a wave washing upon the shore? Mortgage rates are at the lowest tide ever, while home prices are swelling higher, and pending home sales and mortgage applications have declined. And that’s just in the past quarter.
With so much fluctuating data, how does a realtor know what to say with confidence when asked, “So how’s the market?”
A recent report by Reuters quotes Stan Humphries, the chief economist of real estate website Zillow, who said, “2012 will be a very confusing year, but I advise consumers to focus on how a number is relative to last year’s numbers, rather than focusing on monthly blips.”
Okay, I’m game. I took this advice and analyzed numbers from the first quarter of home sales in The Examiner’s distribution area and compared them with the first quarter of last year.
There are three zones in our area, as delineated by the Multiple Listing Service: Zone 1 is uppermost Westchester County, from Peekskill on the West over to the border of Somers on the East; Zone 2 covers the area from Somers down to Armonk and all the toney towns in between; Zone 9 encompasses all of Putnam County.
In Zone One, in 2011, the first quarter results showed that there were 101 homes sold, compared with 86 homes sold in 2012. Ouch. The average price of homes sold in 2011 was $394,009 while in 2012, the average price was $349.961. Ouch again. But does this reflect a continuing downward trend for the whole region or, for that matter, even show a true picture of what is happening in Zone One? What if the first quarter was some kind of anomaly?
In Zone Two, there were 123 homes sold in the first quarter of 2011 at an average price of $1,066,701 (remember the tonier towns), compared with a higher number of 136 homes sold in that same quarter of 2012, but at an average price of $858,899. Should I say “double ouch” here or just recognize that by happenstance, some really expensive homes sold in greater numbers in 2011?
Throwing any semblance of sane analysis into a tailspin, compared with Zones One and Two, let’s look at Putnam County, Zone 9. In all of Putnam, only 50 homes sold in the first quarter of 2011, at an average selling price of $167,321 (a number of homes were sold well below $100,000 and many under $200,000), while in 2012 the number of sales for the same quarter more than doubled to 112 with an average selling price of $310,119, almost double that of the previous year.
Overall, would anyone be willing to predict any kind of trend here? I think not.
Of some comfort is Humphries’ explanation of these wild cards, that the “bottom” is not a discreet period of time, but rather a process. He says that economically you first see a trough in homes sales that then start to rise. The next step is that you see long-horizon buyers (investors, second-home buyers and retirees) re-enter the market. After that, you see mainstream buyers get back in.
It may seem as though we’re suffering quarterly whiplash, as witnessed in our own region, but Humphries explains that condition as reaching a fragile point where, in turning, indicators can go in wildly different directions.
Here at home, there are certain subtle indicators of improvement as defined by Humphries. For instance, rents are up 3.2 percent (my last two rentals this month both received over-asking price offers), while home values are down 1.8 percent. Such figures, according to the economist, reflect the making of stabilizing prices.
The bottom-line advice from Humphries is that the potential buyer’s most important metrics to consider are home values and mortgage rates, focusing on financing costs.
At the same time, sellers should look at the number of homes on the market and the pace of home sales which, with relatively tight inventory, are rising from the year before, so highly evident in the Putnam statistics above.
Anecdotally, I can tell you that, as the spring season comes to a close, the realtors I know are scrambling to service their new listings, and we are fine-tuning our time management skills to keep up with the demand from buyers who have suddenly appeared, cash in hand, ready to buy. And the investors, God bless them, are back as well.
It would seem that the time is actually historic, as is any occasion when inertia transforms into action.
Bill Primavera is a licensed Realtor® affiliated with Coldwell Banker and a lifestyles journalist on the subject of homes. Visit his website at: www.PrimaveraRealEstate.com and, if you would like to consult with him about buying or selling a home, contact him directly at 914-522-2076.