The economy continues to send mixed messages -- some encouraging for real estate, some not -- but this week the positive are edging out the negatives. Yesterday I reported on the July figures released by the National Association of Realtors (NAR), which reflected sales being up even as prices continued to fall. At the end I opined that things seem to be leveling out locally. A recent news article on that topic confirms that it may not be an illusion.
The research company with the largest database of ongoing real estate transactions - First American CoreLogic, which tracks property values in thousands of Zip codes and neighborhoods - reports that nominal price drops have "stabilized" in 883 core-based statistical areas, showing no declines in the past two months.
Why's that important? Because flattening out is what we need before we can see a cyclical turnaround -- in other words, where even in the hardest hit local markets in California, Florida, Arizona and Nevada, prices have hit bottom. They're not likely to drop much further, and in some parts of California are now at such bargain levels that large investors are prospecting for entire packages of houses -- ten or more in some cases -- to buy in bulk and rent out.
The National Association of Realtors sees similar bottoming out -- even the first signs of turnaround -- in a number of key markets in the U.S. In its latest quarterly report, home sales were up year-to-year in 26 percent of all states and 35 percent of metropolitan statistical areas. On the other hand, NAR also reported the national median sales price was down by 7.6 percent from the second quarter of 2007, and now stands at $206,500.
In other key economic developments: New housing starts fell by three percent last month - which is only logical given builders' still bulging unsold inventories. And mortgage rates took a dip this week to an average 6.47 percent for 30 year fixed. Fifteen year rates slipped below 6 percent to 5.99 percent. New loan applications for FHA mortgages to purchase homes rose slightly, according to the Mortgage Bankers Association of America -- even while applications for conventional home purchase mortgages from Fannie Mae and Freddie Mac dropped for the week.
So, is all of this clear, now? The stats are going every which way – some up, some down, some higher than last year and some lower. My gut feel locally is that we are near the bottom and working off the foreclosure inventory at a good pace. Foreclosures, which were running steadily at 50-60% of sales for a long time (it actually reached 100% for one month in back in the winter) are now down to about 33% of sales in the local market that I track – Milford, Highland, Commerce, and White Lake. All-in-all, I'm encouraged by what I think I see starting to happen in our local market. I have lots more shoppers right now than I've had in months. Now, if I could only get a few more to become buyers, too.