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Friday, February 29, 2008

Just a littlle bad news ain't bad...

When is not so much bad news actually good news? You may have seen the news reports survey from the National Association of Realtors about another bad month for resales -- down for the sixth straight month, according to the Associated Press, to the "lowest level" in almost a decade.

But take a closer look: Yes, resales were lower by four tenths of one percent in January, but they were down from an upwardly-revised total for December. Drill down just a little deeper and you find that resales of single family detached houses were actually up in the latest month -- up by one-half of one percent. Condominium and cooperative sales, on the other hand, took a sharper drop -- falling by 6.5 percent, and that dragged down the national sales total overall.

So the real news was mixed: Sales of detached single family units ROSE in January while condos and cooperatives were down. Either way you present it, though, total resales were essentially flat from month to month, hardly as dramatically negative as the scare headlines had it. Maybe we're at bottom, maybe not, but the fact is: Sales are not falling off the charts. You may also recall that the Detroit area has dropped from number one in foreclosures for major metropolitan areas down to number 10. Maybe, we’ll be off the charts soon.

Also last week, there were some other mildly positive economic signs: Construction starts of new houses rose by eight tenths of a percent, and home builder confidence -- as measured by the Wells Fargo/National Association of Home Builders poll -- rose slightly as builders reported seeing stronger flows of shopper traffic through their model homes. Again, there's nothing dramatically positive here, but the numbers are better than they've been in months. They simply got drowned out by all the gloom-mongering. Locally we’ve seen a pick up in open house traffic and the number of walk-ins and call-ins looking for houses has increased.

Even the Conference Board, a research group that represents a broad spectrum of U.S. industries far beyond real estate, said things are beginning to look up for housing. Chief economist Gail Fosler said in a report last week that "the housing market correction is about over … . Housing affordability is beginning to improve, and with the recent interest rate cuts and house price declines, it should improve further."

January and February, said Fosler, "are not big months for housing, but rising affordability (plus favorable demographic trends) bode well" for the overall outlook. Fosler's economic report preceded last week's jumps in mortgage rates -- taking 30-year rates back over 6 percent -- but her forecast on where housing is headed is significant. Someone's got to call the turnaround. Fosler thinks it could start this Spring. I certainly hope that she’s right. I’ve been busy lately, too, and I’m hoping that this increase in activity is not just an aberration.

So, are we there yet? Have we bottomed out? Are we about to see an upturn? It’s hard to make that call yet, but something is different and it gives me hope.

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