Reports are rampant about the state of the housing market. Some statistics point to an accelerated improvement, if only by small steps. Some still list a decline in price, but slower than before.
The new Trulia Price Monitor tracks housing prices using listing price instead of sales price for the largest metro areas. They believe that they can trace market movement better because sales price follows list price by about 2 months. According to their reports, Seattle’s list prices have decreased 9.1 percent over March of 2011 behind only Tacoma’s 11.9 percent decline.
Other areas such as Miami and Phoenix have experienced a double digit increase. Having the large metro areas experiencing a comeback bodes well for Seattle also. Confidence in the future of the housing market will spread.
Local housing reports always use the median price for sales over a specific time span. The median price is the number with the same number of sales above and below. If the number is higher, reports herald the rise in home values. This may give a false statistic since the improvement could simply reflect a sale of more expensive homes.
But, since more expensive homes usually have a longer market time, quicker sales of these properties indicates a strengthening of economic conditions and job growth in the area.
So, if housing prices are slowly increasing, sellers should have a little more hope in getting some of their lost equity back and buyers should understand that they will be paying more if they wait much longer.
One thing that showcases the rise in consumer confidence in the market is a surge in new construction statistics. In 2010, the MLS reported only 63 new single family homes. In 2011, there was a drastic increase to 249 homes. So far in 2012, 594 newly constructed homes have been listed. These numbers are not exact figures since builders do not list all of their properties. They should, however, give hope that the market is improving. Builders do not build homes if they do not expect a demand for their product. New construction is selling faster than expected.
So where is Seattle in comparison to the rest of the country in new home starts? The US Census Bureau recently released figures on permits issued for single and multi-family buildings. Seattle ranked 8th in new permits with over 8,600, far behind Houston with over 31,000. Forty-seven percent of Seattle’s new permits were for multi-family units. It may take years to fully complete homes for all of the permits, but none would be built if the plans were not in the pipeline. Builders have been hit hard by the housing crash. To have them step up and actually plan to build says a great deal about where the market is headed.
Lawrence Yun, National Association of Realtors chief economist, said 2012 is expected to be a year of recovery for housing. “First-quarter sales closings were the highest first-quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good,” he said.
“The housing market has clearly turned the corner,” Yun added. “Rising sales are bringing down inventory and creating much more balanced conditions ... which means home prices will be rising in more areas as the year progresses.”
No one can be absolutely sure of what the future will bring. Prices rising this month may fall next month. A new large crop of foreclosures could be released by the banks completely changing the landscape. One thing is certain, however. There is a new undercurrent of optimism bringing buyers to the marketplace.
Multiple offers are increasing in all areas. Banks are trying to be more responsive in closing short sales. Builders are seeing more sales and are planning for the future rise in population. Prices will eventually increase to meet the growing demand.
A consistent rise is home prices tracked over many more months will finally add stability to the market. Only then, can we be certain that we have hit the bottom of the market at last.
Joan Probala is the managing broker for Issaquah Windermere and has 30 years of experience in real estate and is president-elect (2013) of the Seattle King County Association of Realtors.