Sometimes Headlines are Deceptive
June 25, 2009
There were two headlines this morning in the newspapers that I read that gave a negative slant to the current state of real estate in the U.S. The issue for me is that real estate activity has always had a local component to it. In the 1990s, Southern California was hit harder because of the down sizing of the aerospace industry and the closure of military bases. Check out my postings of June 2, 2009 and June 2, 2008 to see whether we have a "glut of unsold homes".
In many of the 14 communities that I have been tracking, the active inventory of resale properties is approximately half of what it was just one year ago, In fact, prospective buyers and agents are complaining about the limited choices of the homes for sale. This limited inventory has led to multiple offers on homes listed around the median price mark. Multiple offers have the tendency to drive prices up.
Since I am not involved in the new-home market, I have no real data to support my belief that the headline "New-home sales drop 33% since a year earlier" is somewhat inaccurate. Reading the article that followed the headline, I found the sentence that supported my belief about new-home sales in our region: "New-home sales in the West, however, were up 1.3% over April's adjusted annual rate." Remembering that the California legislature allocated a $10,000 credit for purchasers of new homes, it should not be a surprise that those sales have improved. I might also comment that since builders had so much standing inventory of unsold new construction, it is not surprising that new construction has experienced a decline.
I am looking forward to examining the data for the first half on 2009. I am hopeful that it shows that the market has begun stabilizing.
There were two headlines this morning in the newspapers that I read that gave a negative slant to the current state of real estate in the U.S. The issue for me is that real estate activity has always had a local component to it. In the 1990s, Southern California was hit harder because of the down sizing of the aerospace industry and the closure of military bases. Check out my postings of June 2, 2009 and June 2, 2008 to see whether we have a "glut of unsold homes".
In many of the 14 communities that I have been tracking, the active inventory of resale properties is approximately half of what it was just one year ago, In fact, prospective buyers and agents are complaining about the limited choices of the homes for sale. This limited inventory has led to multiple offers on homes listed around the median price mark. Multiple offers have the tendency to drive prices up.
Since I am not involved in the new-home market, I have no real data to support my belief that the headline "New-home sales drop 33% since a year earlier" is somewhat inaccurate. Reading the article that followed the headline, I found the sentence that supported my belief about new-home sales in our region: "New-home sales in the West, however, were up 1.3% over April's adjusted annual rate." Remembering that the California legislature allocated a $10,000 credit for purchasers of new homes, it should not be a surprise that those sales have improved. I might also comment that since builders had so much standing inventory of unsold new construction, it is not surprising that new construction has experienced a decline.
I am looking forward to examining the data for the first half on 2009. I am hopeful that it shows that the market has begun stabilizing.
posted by shirley harry at 8:15 AM
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