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The top chart shows real median home prices for sales of existing single family homes on a non-seasonally-adjusted basis (prices typically rise in the first half of each year, then typically decline). The bottom chart shows the year over year change in these prices in order to factor out the seasonal trends. As both charts suggest, we have likely seen a bottom in home prices, at a level that extends back to the 1970s. Real home prices hit decades-low levels and in effect they were even much cheaper thanks to record-low financing costs.
Message: the housing market has found a market-clearing level of prices, and demand is now picking up. Demand could outstrip supply—even if all those foreclosed homes held on banks' balance sheets were released for sale—if the public begins to catch on to the fact that homes are beginning to rise in price at a time when prices are still incredibly low. The very low level of mortgage rates tells us that the demand for purchasing homes is still incredibly weak; there are likely legions of buyers who have been sidelined for fear that prices would continue to decline given the economy's ongoing weakness and the overhang of under-water homeowners.
4 comments:
I am told that regulators forced loan FICO scores shubstantially higher last summer with the Greek debt issues and high they remain today. Is there a way to track what the average loan FICO is?
Scott - you are being fooled by supply side manipulation. Please dig into the numbers. MLS inventory dropped in half as the banks stopped releasing REO's to the market. This has created a short term stabilization.
46 months to clear the Shadow Inventory
http://www.dsnews.com/articles/shadow-inventory-update-46-months-to-clear-supply-of-distressed-homes-2012-05-14
90+ day mortgage delinquency rate is still near 10%. In normal markets this is close to 1%.Does anyone really think house prices can begin a sustained rally until the delinquency rate gets back to normal?
The increased supply and diminished demand will be a problem for several more years. In the process of clearing out the inventory, lenders will stifle any market rally. That’s the essence of the problem with overhead supply.
Foreclosure starts rose in May from a year earlier for the first time in more than two years after the largest U.S. loan servicers settled with states over faulty documentation.
Every lender and many loan owners are sitting on the sidelines waiting for an opportunity to sell. There is no pent-up demand, but there is plenty of pent-up supply.
And please, please go find some other source of stats than the NAR. It is a completely morally bankrupt organization that has been caught outright lying in their statistics multiple times.
It is incredible to me you even publish their data after they have caught fudging it for years.
Unknown If you data is correct, you make a lot of sense.
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