March and April sales statistics are showing a decent bump in sales volume which is excellent news for the market in most areas of the country. We are also seeing a decrease in inventory making it extremely competitive for some classifications of properties. Take a look at this site for Washington DC homes: http://gcaar.com/toolkit_ektid1592.aspx This does not hold true everywhere of course, so look at your individual market stats to see what is happening.
Has the market turned around? There are three things to watch which will give us a better indication of where we actually are on the recovery line.
1. Foreclosure mediation initiatives. Currently many banks are forcing parties to mediate before foreclosing and this is causing a halt in inventory for buyers who want to remodel homes – causing dramatic bidding wars and price escalations in many cases. My personal belief is that mediation is simply delaying the inevitable and the majority of those homes will eventually hit the market. What happens then?
2. Price decline lines. Many markets are seeing a nice increase in activity because the prices have, and in some cases continue, to decline. We need to see that line flatten out soon, or we could spook the new pool of buyers in the market right now. Will that trend turn this summer?
3. Financing of condos and investor ratios. If you own a condo and your investor ratio is more than 50% it can be incredibly difficult to sell because you need at least 20% down. If you’re in a 1st time home buyer market, that can be difficult to find which dramatically lowers your buyer pool, pulling your values down. The issue here are mortgage insurance companies who will not insure mortgages under these circumstances. Will the MI companies relax their restrictions on investor ratios?
One thing is for sure, this summer will be one to watch in the story of the largest real estate correction ever.E-mail this post