Every week starts off with reports issued by various groups like the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) and others trying to analyze and report what it going on in the real estate market. Reading those reports can leave you scratching your head and wondering, “What did they just say?” That is especially true if you read any of the compilation reports where the Arthur combines 2-3 of the other reports.
This morning’s RealtyTimes report had one such article in which the author, Carla Hill juxtapositioned bits and pieces from some of the official releases of various learned groups. Reading any two sentences in a row almost makes your head spin. Delinquency rates are up, but they are also down (new delinquencies vs. 90+ day delinquencies). Home affordability is the best it’s ever been, but no one can afford to buy a house. Huh?
Both NAR economist Lawrence Yun and MBA chairman Bob Nielson agreed that tight credit requirements by banks, in addition to continued economic weakness are the major culprits. Overall sales of existing homes declined by 3.5% in July from June in the U.S. Of course there are some bright spots – a couple of the regions that both groups track are in positive territory – the Midwest with a 1% growth in existing home sales and the Northeast with 2.7% growth. The Midwest even saw 31.3% year-over-year growth in existing home sales.
I guess it’s best just to ignore all of these higher level reports and focus upon the market that’s right in front o me. I report on it every week on my Web sites. Even in my little patch, which covers only 9 townships in Southeastern Michigan there is great variability. A few of the townships – West Bloomfield, Highland and White Lake – are still mired in foreclosures. A few are just putzing along with relatively low sales activity even if their homes are more affordable that ever – Milford, Green Oak and Hartland. A couple are doing OK, with reasonable sales activity – Commerce and Brighton – and one is doing fairly well by today’s standards with new build home sales driving its market – South Lyon. You can see all of the statistics that I report about those markets at www.movetomilford.com.
Home prices nationally are still declining and that is generally true in my little patch too; although, the rate of decline has dropped into the low single digits, which is a good thing. I also seeing more and more homes sell for well above their assessed value, which is an indication more than anything that the assessors may have overshot the mark on lowering home values for tax purposes. Low bank appraisals also continue to be a major issue in my market and that issue is not helped by the lower assessed values. Both assessors and appraisers are now using distressed home sales as comps, which has created sort of a downward spiral effect.
Low inventory is becoming a real issue here, too; especially in our traditional market sweet spot of $200-400K. The people who own those homes now are under water on them and reluctant to put them on the market. So, what “move-up” buyers we have out looking are finding pretty bare shelves in this market. The lease market inventory has also almost dried up, since so many displaced people have been renting while they try to rebuild their credit. It’s very tough to find anything in the lower end of the rental market (under $1,500) that is suitable for a family to live in.
As a Realtor, I guess I benefit from one of the bad news-good news statistics, too. The bad news is that many licensed agents have left the business (especially the part timers). The good news is that I get more of what little business is left. That seems to be true across the country too, with the number of Realtors down considerably and fewer coming into the business. Of course brokers don’t like that, since there are fewer agents to collect monthly fees from to sustain the broker business model. Maybe that will force some changes to that whole model.
So, that’s my report from the hinterlands. Things are good. Things are bad. Things are up and things are down. Everybody knows why, but nobody knows how to change anything. Blame the banks. Blame the government. Blame anybody but me.