There were a few articles posted around the web questioning if the housing market is sputtering out after the National Association of Realtors posted the June Existing Home Sales Report on Thursday. “June sales are down because of lack of inventory”.
These are great headlines but the truth is a little more evasive. The market is in transition and that does not come without some pains and ups and downs. One of the major market shifts is that the inexpensive foreclosed inventory of homes is dwindling, which is bringing the median sales price higher. This is a good thing, even though it may slow sales down with lack of inventory – this inventory was a huge drag on the housing market.
NAR chief economist, said the bigger story is lower inventory and the recovery in home prices. “Despite
the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets,” he said. “The price improvement also results from fewer distressed homes in the sales mix.”
So what does the Twin Cities Inventory and Sales look like?
For homes sold, it really appears like we had hit bottom last year. The chart below show a surge in Traditional sales closed up 38.2% to 3,328 units while Foreclosure closings dropped -12.3% to 1,248 units and Short Sales nudging slightly up to 487 units for June 2012.
It appears from this in the Twin Cities that if the buyer is not finding what they want in the Foreclosure inventory they are finding it in the Traditional Inventory.
How long will the buyers continue to find what they want in traditional inventory? Well, if this trend continues we will have a serious shortage of homes for sale… HOWEVER – I believe there are enough people willing to make a move to sell their home if they weren’t upside down on their mortgage, having prices increase will help the negative equity situation and open up the market again.
So I see this as a short lived growing pain to get through – inventory shortage to bring prices back up which will then open up the market.
Median Sales Price for Twin Cities area, as you can see median prices are beginning to nudge up. This is a great thing, this will help pull people out of the negative equity situation and allow them to then sell their homes. Having the “foreclosure” inventory and “short sale” inventory dwindle is a great thing – everyone will benefit from this.
There will be lots of headlines and “news” about every little change in the housing market, but overall we are still slugging out the path to the housing market recovery.
The real headwinds in the housing market now is the Employment situation and the appraisal and mortgage regulations in Dodd-Frank.