An April Real Estate Blowout?

Carpe Diem May 15, 2012

Professor Mark J. Perry's Blog for Economics and Finance

In what might be looked upon as a major turning point for the U.S. real estate market, April is shaping up to be one of the best months in years for home sales. Based on news reports for April sales that have been released in the last few days, there are now at least 20 21 22 23 24 metro markets (Seattle, Kalamazoo and Wilmington were just added) that have reported double-digit gains in either the number of homes sold, or median home prices, or in some cases, both. See the list here. The full national report for existing-home sales in April will be released next Wednesday by the National Association of Realtors, and the early sales data that covers most parts of the country predicts a very positive April sales report for both homes sold and median home prices. Until then, I'll continue to follow and report on metro area home sales, as those reports become available.

double digit gains may be occurring is selected markets, but i think it's far too early to call it common.according to trulia, whose data i am not that familiar with but who, it would seem, ought to have a lot of real time info for april 2012:"In total, 44 out of the top 100 metros saw home prices go up year-over-year; despite this, overall prices only increased 0.2 percent from the previous year. On a quarter-to-quarter basis, prices rose in 92 out of 100. National prices were up 4.8 percent in the same period (unadjusted for seasonality).so we see a 4.8% quarterly jump, but that's largely seasonality. prices jump every spring as that's when buyers tend to become active, but only 20bp year on year, which a long way from double digit.of interest, nationwide rents were up 5.6% from a year ago in april. with double digit gains in many metro areas.i'd love to see housing prices rally, but the tricky bit is where the down payments are going to come from.average home equity in the us is currently 7%. to get to a 20% downpayment, you either need to trade down to a significantly cheaper house or put a great deal of cash in.nar data puts sales in march up over 5% from a year ago and was the 9th consecutive month with yoy sales growth and pricing was slightly higher than a year ago as well at 2.5%.so housing has been stabilizing a bit.that said, at 10% growth yoy, it's still going to be 5 years to get back to 2007 levels.it's just really early to call this. there has been a mild weather effect and i also wonder if this is really "recovery" or just the pool of truly distressed sellers finally drying up.real estate will come back. i bought multiple properties in the last 2 years as it just seemed like a good time to do it. that said, i do not expect them to be great investments compared to other assets classes. real estate almost never is. contrary to what they think, most people lose money on their house if they have a mortgage (though current rates are certainly attractive).

Watch Wednesday's housing starts data too. Might be big.

This is my anectodal observation from a lot of driving in the Puget Sound area the last seven days:Four letters S O L D are suddenly appearing on many, many For Sale signs in residential yards.

Looking at the prelim data, I think we'll see pockets of double-digit growth. I doubt it will be a national trend, and the NorthEast still looks weak. The West is probably your best bet to seeing these gains.

I don't see anything much happening in San Antonio. So much for the Eagle Ford boost.

I wish someone would tell Wall Street how wonderful everything is. Ugly out there.Austerity and tight money does not work. Balacned budgets and a bullish central bank is what works.

How many are being bought by investors to use as rentals?West of me there are a number of factories that manufacture hous parts: Trusses, panelized homes and modular homes. I see more of their trucks on the road, headed for the city now than two years past, when there were almost none. Without actual numbers, my observation is that the growth in such traffic has been slow but steady.

Housing prices recovered a year ago, measured by the FHFA (Federal Housing Finance Administration), but prices in Case Shiller cities are still falling. The Case Shiller 20 city index is reasonably accurate, but unrepresentative. House prices in these cities are twice the national level. While the Case Shiller index declined 34% since the peak in 2006, prices outside these regions declined only 13%. So in the heartland prices are improving but the Case Shiller cites in California and the Northeast (New York and Boston) are falling. The US housing market in recovery will differ sharply by region which is the way it always does. The recovery is good news unless you own property in cities like Los Angeles.

Phoenix is hot right now. Anecdotal, but a realtor buddy of mine has over 75 offers on a a property he put on the market less than a week ago.

If unemployment is still high and jobs still hard to come by for many... where is this "new" money coming from?or is it not "new"?

for it to be sustainable, real DPI per capita must reverse its decline...

@Buddy: Where in the Puget Sound area do you live?I live in south Snohomish County, and construction is booming around me. I talked to one saleswoman at a development near me that's been under construction for just 2 months, and she's sold 10 houses just in the past 1 month. Houses in the mid-upper $300's. Lots of other developments around me like that one too.And anything built by Polygon Homes is *really* selling like gangbusters.

The danger with housing is that theirs much pent up demand in the system since 2007 the housing market has been in decline not just price wise' declines have taken place in the movement of inventory on the market. On the other hand household formation has been expanding since 2007 by how much at least 1% a year. Their are few new homes being constructed so the real potential now exsists for another housing boom to occur because of low mortgage rates. The problem is the federal reserve needs to act now to head of another potential housing boom and bust. What many folks forget is that the price of homes in the united states is far lower now than any other industrialized country in the world. I recently was listening to some news story about the housing market in miami its red hot they were saying foreigners are buying everything in sight in some areas of miami. This foreign demand along with domestic demand along with super low interest rates has the real potential to run off the rails if caution is not carefully exercised by the government by buyers and sellers by banks and mortgage companies and realtors. I can hear the chatter once again buy now theirs never been a better time to buy the young couple in their twenties is hearing it from the real estate guy in the office this will be a once in a lifetime opportunity what happened over the last five years was an extraordinary coincidence it will never happen again in are lifetime. So says that seeming bright eyed realtor with the frickes that looks like he's twentyone but is really twenty eight.

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An April Real Estate Blowout?

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