7 signs that real estate is rebounding

April 21, 2010 — Leave a comment

tired of the doom & gloom media portrayal of the real estate sky falling….crumbling…crashing down?  tired of hearing them turn every positive into a negative?  need a sign that real estate is rebounding?  how about SEVEN of them??  you do?  great – then please read on!

PENDING HOME SALES

according to NAR, pending home sales rose by 8.2% in february.  as if that weren’t good enough news by itself – pending home sales are up 17.3% over what it was last year!  pending home sales are considered a LEADING indicator – meaning they forecast the direction of the economy.  the doom & gloom will look for the dark cloud inside this silver lining and probably print something like “the index is ONLY up due to the expiring tax credit”.  sure, sure, sure….the warm weather, low-interest rates, improved consumer confidence, lower prices, OR the beginning of the homebuying season have NOTHING to do with it!??

HOUSING STARTS

housing starts, especially local, are up compared to this time last year.  why is this good?  housing starts, like pending home sales, are another leading indicator.  here locally (DFW) housing starts are up more than 60%!!

NEW & EXISTING HOME SALES

new home sales increased 20.8% in the west which is one of the nations HARDEST hit regions – THAT alone is great news for the entire country!  additionally, existing home sales in february outpaced the same data from february ’09.  improvement?  i think so!

INVENTORY

in 2009 there were 11.1 months worth of new homes and 9.7 months worth of existing homes for sale in february. BOTH of those numbers dropped this february – there were a reported 8.6 months worth of existing homes for sale and 9.2 months worth of new homes for sale.  a balanced market for existing homes is said to be ~6 months of inventory….getting closer!

HOUSING AFFORDABILITY

according to NAR the median priced existing home was $164,300 and the avg mortgage rate was 5.0%. with median family income at $60,498, a family’s housing payment would only be 14.2% of its income.  let’s compare these figures with 2007 (the peak) when a house cost $217,900, mortgage rates were 6.52% and median incomes were about the same at $61,173.  lower prices + same median income + 1.5% LOWER interest rate = improved affordability = improving housing market!!

MORTGAGE INTEREST RATES

mortgage rates are STILL at historic lows with the average being 5.17% as of april 9th.  remember, during the peak of ’07 rates were in the mid 6’s.

REAL ESTATE MUTUAL FUNDS

you probably haven’t thought much about this one.  according to morningstar, real estate mutual funds returned 9.4% in the first quarter of 2010 – which is one of the highest returns of ANY mutual fund category.  furthermore, over the last year they have led ALL mutual funds.  this is indicative of investor confidence in the overall real estate market – good stuff here!!

i’d like to thank Investopedia ULC for the original story which you can find at investopedia.com and is a forbes digital company.

according to cole the real estate sky is NOT falling!

much success! -cole

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