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Has housing turned the corner for good?
The June 2011 Case-Shiller Index reading posted strong numbers across the board, with each of the index’s 20 tracked markets showing home price improvement from May.
Some markets — Chicago and Minneapolis — rose as much as 3.2 percent.
The rise in values is nothing about which to get overly excited, however. The Case-Shiller Index is just re-reporting what multiple data sets have already shown about the summer housing market; that it was stronger than the spring market, and that a recovery is underway, but occurring locally, at different rates.
For example, the June 2011 Case-Shiller Index shows the following :
- Denver, Dallas, Washington D.C., and the “California Cities” bottomed in 2009. Each has shown steady improvement since.
- None of the Case-Shiller cities showed negative growth between May and June 2011.
- 12 of Case-Shiller’s tracked cities have improved over 3 consecutive months.
The answer to the question is YES. For the past 90 days Home Values are on the Rise. Here in the North Georgia Mountains, our communities of Ellijay, Blue Ridge, Blairsville and Hiawassee has seen Home Values as a cumulative average drop 2% over the past year. However, since June of 2011, our Residential Real Estate Market has experienced a surge of nearly 14% in Median Sold Price. See Full Report Below.
North Georgia Mountain August 2011 Median Sold Price Report
In isolation, these statistics appear promising, but it’s important to remember that the Case-Shiller Index is a backward-looking data set, focusing on just a portion of the national housing economy.
As an illustration, the Case-Shiller Index’s “national report” only includes data from 20 cities nationwide. They’re not the 20 biggest cities, either. Smaller metropolitan areas such as Minneapolis (#48) and Tampa (#51) are included.
Larger ones including Houston (#4), Philadelphia (#5) and San Jose (#10) are not.
In addition, the Case-Shiller index fails to track sales of condominiums, multi-unit homes and new construction. In some markets, including Chicago, these excluded home type can represent a large share of the overall market.
The Case-Shiller Index is a fine data set for policy makers and economists. It describes the broader housing market and shows long-term trends. For the individual home buyer in Hiawassee , however, it’s much less useful. More than “broad data”, you want focused data that’s current and relevant.
The best place for data like that is a local real estate agent.
Related articles
- Home Values Climb Rise Slightly Nationwide In April (thefrontporchview.com)
- Buyer Opportunities Open With Pending Sales Slipping (thefrontporchview.com)
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Home values dropped for the sixth straight month in March 2011, according to the Federal Home Finance Agency’s Home Price Index. The Home Price Index is a government-sponsored home value tracker.
The HPI report is the latest in a string of “falling home values” stories — a trend that’s troubling home sellers across Hiawassee, Ellijay and nationwide.
However, although the Home Price Index says home values are falling, that doesn’t necessarily mean that they are. Like most statistics in the housing sector, the Home Price Index is plagued by poor methodologies and a lack of timeliness.
In short, the Home Price Index is flawed. In three ways.
The first big flaw in the Home Price Index is that it only measures the values of homes with mortgages backed by Fannie Mae or Freddie Mac. Homes financed via FHA, or via other means are specifically excluded from the calculation. For today’s purchase market, that leaves more than 1 in 4 homes “uncounted” — a big percentage of the market.
Second, the Home Price Index determines home values by measuring price change from sale to subsequent sale. This eliminates new homes — a major market segment.
And, lastly, the Home Price Index reports on a 60-day delay; we’re only now seeing data from March. This two-month lag renders the HPI a trailing indicator for the housing market instead of a forward-looking one. If you’re a home buyer looking for market insight, the HPI can’t give it — it’s out-dated and out of season.
Despite its shortcomings, though, we can’t ignore the Home Price Index completely. It’s among the most thorough home valuation models available, and it’s used in public policy discussions. When the HPI says prices are down, Wall Street and Capitol Hill take notice, and that trickles down to everyday life on Main Street.
Since peaking in April 2007, the Home Price Index is off 19.1 percent.
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Annualized Single-Family Housing Starts dropped 1 percent in January to 413,000 units nationwide, it’s lowest reading almost 2 years.
A “Housing Start” is defined as a home on which construction has started.
Now, if you had only seen the Housing Starts story in the headlines today, you wouldn’t have known that single-family starts fell at all. It’s because of how the story is being reported.
Most commonly, newspaper headlines are reading something similar to “Housing Starts Jump 14.6%” with the lead paragraph making mention that “housing starts are at their highest levels in 4 years”.
It’s a true statement, but it’s misleading, too.
This is because, despite the Census Bureau reporting Housing Starts by property type — single-family, multi-family, and apartments — the media often lumps them into a single data set.
It’s a categorization that helps investors in home builder stocks, but it does little for everyday Blairsville Home Buyers. The huge majority of buyers aren’t buying multi-units or whole apartment buildings — they’re buying 1-unit homes.
Here’s how January’s Housing Starts broke down by type:
- Single-Family Homes : Down 4,000 units, or -1%
- 2-4 Unit Homes : Negligible change
- Apartment Buildings : Up 46,000 units, or +80%
Clearly, the surge in Housing Starts can be attributed to the rapid rise in the 5-unit-or-more sector. Single-Family Starts were weak, by comparison.
Even with all of this noted, however, we can’t even be certain that the January Housing Starts data is accurate anyway. A footnote in the government’s report shows that, although single-family starts are said to have decreased 1 percent, the data’s margin of error is ±8.6%.
Here on a more local level in the North GA Mountains, permits for new construction homes are down considerably from recent years. Land For Sale in North GA is now becoming more and more sought after by Real Estate Investors looking for great Real Estate Investments. Empty Lots in seemingly abandoned developments are extremely undervalued and prime for purchase. With little increased activity in Vacant Lots and Tracts of Land For Sale, many home builders in Blue Ridge, Blairsville, Hiawassee and Ellijay are hopeful that their services will soon be needed.
Total New Construction Permits Issued In 2010 For Each County Of North Georgia
- Gilmer – 91
- Fannin – 123
- Towns – 54
- Union – 68
This means that the true Single-Family Housing Starts reading may be anywhere from -9.6% to +7.6%. The data is throw-away. Housing Starts may have actually increased in January, but we won’t know until revisions are offered later this year.
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The housing market continues to expand, and surprise.
According to the National Association of REALTORS®, November’s Pending Home Sales Index gained 3 percent from October. A “pending home sale” is a home under contract but not yet closed.
The index is now at its highest point since April 2010’s federal tax credit contract expiration deadline.
If the tax credit really did “borrow” sales from the summer months, as has been theorized, housing has rebuilt its foundation.
We know this because, of all the housing data available to Hiawassee, Blue Ridge, Blairsville and Ellijay Homeowners and home buyers, the Pending Home Sales Index stands apart as a forward-looking report — its designed purpose as described in its methodology.
Because 80% of all homes under contract close within 60 days, and a statistically significant share of the rest close within months 3 and 4, the Pending Home Sales Index is an excellent predictor of future Existing Home Sales data.
This is in contrast to the New Home Sales data and Case-Shiller Index, as examples, which both describe the real estate market as it existed two months in the past. The Pending Home Sales Index reports on housing as it exists right now. We should expect January’s Existing Home Sales report, therefore, to show marked strength, consistent with a housing market recovery.
The downside of the Pending Home Sales Index is that it’s a national report and real estate is not sold nationally — it’s sold locally. To get a feel for your home market and how it’s faring, Contact Me or come back and visit me on The Porch for future posts with access to local home sale data.
If pending sales data is available, so much the better. Forward-looking figures can be more helpful than data that’s already old.
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Existing Home Sales jumped another 6 percent in November, the report’s third month of improvement since bottoming in July.
According to the National Association of REALTORS®, a quarter-million more existing homes were sold during the annual period ending in November as compared to October. An “existing home” is a home that cannot be considered new construction.
Additionally, the national housing supply dropped by a full month. At the current pace of existing home sales, the complete stock of homes for sale will be exhausted in 9.5 months.
November’s strong housing data is yet another signal to buyers in Hiawassee and Ellijay that the housing market’s foundation has been rebuilt, and that a rebound is imminent. It’s helped that there are great “deals” on which for buyers to pounce.
In November, Short Sales and Foreclosures accounted for one-third of all existing homes sold, and carried an average price discount of 10 percent and 15 percent, respectively, as compared to non-distressed sales.
Repeat buyers continue to power the market, too, representing more than half of all home buyers.
- First-time buyers : 32% of all buyers
- Investors : 19% of all buyers
- Repeat buyers : 51% of all buyers
This breakdown suggests that housing has regained its footing. First-Time Home Buyers can’t support a market long-term like repeat buyers can and, as compared to 12 months ago, the percentage of repeat buyers is now up 14 points.
Home Buyers take note. Raw sales volume is rising and available inventory is dropping. Basic supply-and-demand tells us that this will lead home prices higher. Furthermore, mortgage rates are rising quickly, increasing the cost of home ownership.
If buying a home is a part of your plan for 2011, consider accelerating your purchase time frame. Existing homes account for more than 80% of homes sold nationwide. If the market keeps improving like this, your home affordability will worsen.
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According to foreclosure-tracking firm RealtyTrac, the foreclosure filings fell 21 percent in November to 262,339 units nationwide. A Foreclosure filing is defined as default notice, scheduled auction, or bank repossession.
November marked the first time since February 2009 that the number of monthly filings failed to surpass 300,000 units.
There were other notable November statistics, too, included:
- November’s 21 percent month-to-month decrease was the largest in RealtyTrac’s recorded history
- November’s 14 percent year-to-year decrease was the largest in RealtyTrac’s recorded history
- Nevada led the nation in foreclosure activity for the 47th straight month
However, we can’t read into November’s RealtyTrac report too much; ultimately, history may treat it with an asterisk. Controversy surrounding the so-called robo-signers forced some of the biggest banks to institute a temporary halt to foreclosures in November. Foreclosure activity did fall last month, but the moratorium makes the figures look better for housing than if there had been no interference.
The halt in foreclosures is also why Utah leaped into the #2 state for foreclosures nationwide. Perennial foreclosure-leading states like California, Michigan and Arizona posted double-digit improvements in November whereas Utah did not.
Banks have since resumed foreclosure activity so December’s results may be a better gauge for how the market is truly performing.
Foreclosures tend to be sold at discount and low home prices can entice home buyers to make an offer. If you’re such a buyer in Blue Ridge, Blairsville, Hiawassee or Ellijay Georgia and want to look at Foreclosed Homes, give me a Call at 706.994.8686 first, or Contact Me to begin your search.
Although there’s a host of online search engines that specialize in foreclosures, I have access to broader inventory, plus the ability to negotiate it more effectively.
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After 3 straight months of improvement, the Pending Home Sales Index slid lower in September. As compared to August, September’s reading fell 2 percent.
A “pending home sale” is a home under contract to sell, but not yet closed. The data is drawn from a combination of local real estate associations and national brokers, and represents 20 percent of all purchase transactions in a given month.
Because of the large sample set, and because 80 percent of homes under contract close within 60 days, the Pending Home Sales Index is a terrific future indicator for the housing market. A high correlation exists between the Pending Home Sales Index and the NAR’s monthly Existing Home Sales report issued two months hence.
Expect home sales to idle into the New Year, therefore.
For home buyers in Blue Ridge, Blairsville and Ellijay Georgia this is good news. Over the last two months, housing markets have overwhelmingly favored home sellers.
Consider than, since June, the volume of both new home sales and existing home sales has increased, causing the available home inventory to fall by months. Meanwhile, helped by low interest rates, demand from buyers has remained relatively stable.
As with everything in economics, falling supply with constant demand leads to higher prices.
Therefore, the Pending Home Sales Index’s fading September figures suggest a more balanced supply-and-demand curve in the months ahead, a move that should suppress rising home prices and shift negotiation leverage back to the buy-side.
So long as mortgage rates remain rock bottom, the autumn season is looking like a terrific time to buy.
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Gilmer County Residential October 2010 Market Report
Leaves aren’t the only thing falling in Gilmer County. Much like that of the surrounding counties in the North Georgia Mountain Real Estate Market, the Median Sold Price for Homes Sold in Ellijay, GA. has dropped 10% from September of 2009. The Median Sold Price for residential sales in Gilmer county dropped $15,500 to $137,500. The Median For Sale Price for Gilmer County also dropped year over year 7%, a change of $15,000 to $199,900. What is more staggering than that is the fact that there were 13 fewer homes sold in September this year, than the 35 Homes Sold In Gilmer County last September. The number of Homes Under Contract in Ellijay were also down 8%, down to 37 Pending Sales from 40 a year ago.
The number of New Listings For Sale In Ellijay being offered on our MLS was down 10%. The total number of Homes For Sale in Gilmer County was down 5% from September 2009 to a total of 819, a change of 41 homes. The Average Days On Market (DOM) was down 17% to 156 days. The Months Supply of Inventory, also known as The Absorption Rate, was up 2% to 19.3 months. The Absorption Rate tells us home many months it would take to sell all the homes available under current market conditions.
I hope that you have found this Gilmer County Real Estate Market Report to be useful. If you are planning on purchasing a home or property in the Gilmer County area, or other areas in the North Georgia Mountains, please Contact Me. I would be grateful for the opportunity to work with you, and to assist you every step of the way.
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When: Saturday October 30th, 2010
Where: Apple Mountain Arts Center
Apple Mountain Art Center has a Haunted Hotel! Come support us and promote the local theater coming to downtown Ellijay.
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39th Annual Georgia Apple Festival of Ellijay
When: October 16th – 17th 9:00 A.M. – 6:00 P.M.
Where: Ellijay Lions Club Fairgrounds
The Ellijay Lions Club, the Gilmer County Chamber of Commerce, the cities of Ellijay and East Ellijay, and Gilmer County invite everyone to come and enjoy the 39th year of the Georgia Apple Festival. There are over 300 vendors with handmade, hand-crafted items, as well as many on-site demonstrations of how selected types of crafts are made. This year promises many new crafts as well as favorites from past festivals. There is a parade and antique car show each year. The antique car show is held at the Civic Center on October 9th. The parade is on the second Saturday, October 16th and begins at 10 A.M.
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