Stability in markets usually implies a good balance between supply and demand, and the residential real estate market is moving in that direction. However, while stable housing markets typically carry 7 months of inventory, we’re still carrying an average of about 9 months worth of homes. So while we’re closing in on stasis, we’re not quite there.
What’s helping to hold us back is that the 9 month figure applies to houses in the mid and lower priced range. Those homes are of interest to first time home buyers and speculators. However, in the higher end of the real estate market, from $500,000 and up, we’re holding closer to 15-18 months of inventory. Until those homes start to clear out, true market stability cannot be achieved.
The Sun Sentinel quotes Federal Housing Finance Agency numbers that show an average 0.3% price rise between June and July, and some pundits will claim that this is evidence of stabilization in the housing market. However, prices in the market still average 4.2% below last year’s highs, and more than 10% lower than peak prices in 2007. While these figures look good, they don’t include subprime loans and the expensive homes in the market. If they were added in, prices would reflect drops far greater than 10%.
However, what is much more indicative of the market’s movement toward price stability is the rise in enrollment if real estate schools. Many around the country are reporting increases of 30% or more in class size. Numbers of students are coming closer to 2005 levels, when enrollment was at its peak. This is not surprising, because the media has moved from absolute gloom to stories indicating that real estate is once again on the rise. While that rise may be slow and painful, we are, nonetheless, hearing about real estate success stories.
Many people who cannot find jobs, or who have entrepreneurial aspirations, are gravitating to real estate because they perceive that this segment of the economic picture is improving. This positive outlook on residential real estate will only help to keep home sales moving. So will uplifting economic figures, such as those from today’sWall Street Journal, which said that housing starts hit their highest levels in 9 months and that retail sales jumped an unexpected 2.7%, In addition, industrial production rose this month..
Despite all this good news, we still have a few hurdles to clear in the residential real estate market before it becomes stable. However, if this group of fresh from the factory real estate agents can push high end properties into the market and clear that excess inventory, we may finally achieve real estate market stability once again
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.marcjablonhomes.com/
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