After The Tax Credit – What’s Next For Our Housing Recovery?
Last week I had a chance to hear Dr. Lawrence Yun, NAR’s Chief Economist, share his insights as to what’s next for our real estate recovery. He quoted some of our nation’s brightest financial “wizards”:
• Ben Bernake, Federal Reserve Chairman – “The outlook remains unusually uncertain”
• Alan Greenspan – “If home prices start falling again, we could be facing a double-dip recession”
Dr. Yun’s “baseline outlook:
• Moderate GDP expansion of 2.5% for the next 2 years (historical average is 3%)
• 1.5 million job additions in the next 2 years
• Unemployment rate down to 8% in 2012 and “normal” by 2015
• Mortgage rates rising to 5.7% in 2011 and 6.2% in 2012
• Home values – no meaningful change over the next 2 years
• Home sales will struggle in the near term (after tax credit hangover) and then rise with job growth
With that said…
July numbers are in and the beneficial impacts of the tax credit have, for the most part, been left behind.
July sales in Ada County were 400. That’s an decrease from June ’09 of 24%. Year-To-Date ’10 is now 3,532; an increase of 25.5% over the first seven months of 2009. Historically, sales volume decreases from June to July by an average of 23% over the last five years. True to form, July ’10 was 39% lower than June ’10.
Of our total sales in July…46% were distressed….essentially unchanged from a month ago.
Pending sales rose slightly in July to 700; from 650 in June as the tax credit expired. Pending sales in April were 1,162; May 806.
The percentage of pending sales in distress fell 4% from June to 46% overall. That’s down from nearly 20% our high in March. One bright note, default filings continue to slow.
Inventory held steady over the last three months; now at 3,738 houses. At the same time, the percentage of active inventory that is distressed, decreased by nearly 9% to 38% at month’s end. In Ada County we have 7 months of inventory on hand. The price category in shortest supply…$200k – $250k at 5.8 months. While this number went down…inventory in the first-time buyer price range actually increased by almost 2 months. Could we be seeing some actual “trade ups” beginning to occur?
Median home price held on to gains made starting in March of this year. In July our combined median was 162,500; down 7.1% from July ’09. This represents 3 consecutive months of modest improvement. our YTD comparison to ’09 is off 9%. Interestingly, average sales price crossed the $200k line for the first time this year.
NAR announced last week that Bank of America and others have pledged to reduce short sale processing time from an average of 148 days to a more reasonable 53. If they are successful in this regard, we’ll all owe them a big “Thank You”.
Stay tuned…
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