How’s the market is the question everybody is asking… Following that is: When will the market recover? While the question is frequently asked, I never tire of looking for indicators of a recovery and sharing my insights.
There has been a barrage of positive reports as 2011 came to a close and we began a new year entering into what is now the sixth year of market contraction in the housing market. With a national increase of 5% in units sold during 2011, many are proclaiming 2012 the year of market recovery. I, however, have serious doubts that these wishful thinking market cheerleaders are accurate.
Now don’t get me wrong… I too am wishing for a market recovery… I have however learned that what I want and what I get do not always coincide.
While it is certainly encouraging that the number of units sold last year increased over the dismal numbers of 2010… and further, that New Housing Starts are expected to increase in 2012, those increases (real and projected) do not tell the whole story.
While it is certainly encouraging that inventory levels in the Birmingham MLS Market have, for the moment, fallen to below 10,000 units, the number of units (homes) sold in the Birmingham Market increased only 1% as compared to the National rate of 5%.
Even as you look at the improved sales numbers, when we look at sales as compared to inventory we saw a modest increase in months of inventory from 2010 to 2011 (not the direction we wish to travel in). Then there is the price received as a percentage the last list price for homes that moved from 94.94% in 2010 to 94.79% in 2011… again wrong direction. From December-to December we did see a drop in the months of inventory on the market from 11.49 to 10.74 months… a move in a positive direction… albeit probably a very temporary improvement.
All in all it feels very much like we are either approaching or bumping along the bottom of the market in what is likely to be a very wide valley.
Rather than looking solely at history, perhaps it would be useful to look at what is going on at the present that will impact the future movement of the market. Perhaps more important than last year’s sales numbers and far more indicative of market direction, the rate of mortgage delinquencies points to an ever increasing inventory of homes on the market many of which will be distressed properties adding to the downward valuation of homes.
The one thing that might have some middle-term impact on this erosion of market value is a movement by lending institutions and investment groups to convert the huge inventory or REOs (post foreclosure properties) to rentals. The advantage of such a move would be to arrest the physical decline of unoccupied properties and thus slowing the erosion of property values while responding to an ever-increasing shortage of rental properties, a market segment where we have been seeing substantial increases.
All that said, the most important of all factors to remember is that these national statistics really provide little useful information to you the individual reader… for you see all Real Estate is LOCAL!
The Birmingham Market is literally made up of hundreds of micro markets, each with its own set of dynamics to be understood to be able to answer your questions about market conditions in a meaningful way.
Therefore, to get a meaningful answer to this question for any particular individual market (unless you are a macro economics aficionado) the person providing you with their insights should be asking the question where do you live or which market are you wanting an answer to for that question.
If you’re looking for answers to that question for any of the Birmingham Metro Markets you can get answers targeted to your specific neighborhood at www.HomeValuesInTrussville.com … Note that this site let’s you define by address the area / neighborhood that you are interested in market conditions… Furthermore, it does include the ability to see more than neighborhoods in the Trussville Market… So take a look at the facts for yourself…
And as always, if you need any help determining the meaning of that information drop me a note or contact a Trusted Realtor Professional familiar with your specific market.
May the market be with you.
