Existing home sales climb for March
Since the Great Recession had origins in real estate (at least partially), existing home sales have been of great interest. The existing home sales rose by 6.8 percent in March. It’s believed the first time homebuyer tax credit had a hand in the spike. Because so many people had been hard up to get the financing, and others went running for mortgage loan modification, any modest gains in real estate are welcome signs of relief.
Existing home sales reflect inventory
Existing home sales are defined as sales of single family homes that are not new construction — any single family residence not brand spanking new, in other words. The National Association of Realtors recently released its monthly report concerning existing home sales, and things are starting to look up. More homes are available, which means lower prices. Not that you’ll ever be able to buy a home for a couple of payday loans worth, but the sun is shining, and people are making hay, so to speak.
Inventory is up as well
According to CNN, home inventories rose by 1.5 percent, with an inventory of 3.58 million homes available. The median home price rose 0.4 percent to $170,000. The supply of homes (how long it would take to sell inventory at current pace) dropped from an 8.5 month supply in February, to an 8 month supply for March. Single family home sales rose 7.3 percent, to a rate (homes sold per year) of 4.68 million, up from 4.36 million in February. According to the NAR report, 44 percent of sales were to first time homebuyers, up from 42 percent in February.
Why the sudden boom?
Late winter home sales are often affected by late winter storms, and January and February had some doozies. Also, the first time homebuyer credit is believed to have affected sales. An $8,000 credit off the tax bill may have encouraged some homebuyers who were on the fence. NAR Chief Economist Lawrence Yun said the tax credit “has been a resounding success.”
Distressed homes or foreclosures
Foreclosed or distressed homes accounted for 35 percent of total sales. Lower prices make them more attractive to first time buyers with hesitancy over the market. Regarding foreclosures, Yun said, “In fact, foreclosures are selling quickly, especially in the lower price range that are attractive to first time homebuyers.”
So is the housing recession over?
The way markets work is that conditions constantly cause adjustments – supply and demand, Econ 101 kind of stuff. However, depressed market conditions are to eventually reverse – as demand lowers, supply increases, and prices lower. Lower prices mean people who want to buy will because they’re getting their desired commodity for a discount. Eventually, supply decreases and demand, and thus price rise again. The market is recovering naturally, as it always was going to.