The year end statistics are coming out from various sources around the country and the broad consensus is that real estate had a surprisingly strong rebound year. Here are a few recent articles that summarizes the state of real estate across the union.
The Year Everyone Was Wrong (Again) About Home Prices – Wall Street Journal – January 22, 2012
The premise of this article is that nobody predicted that 2012 would see real estate price appreciation. Here are a few excepts:
Looking back at the survey from December 2011shows that around 42 panelists, of the 94 that made their predictions public, saw prices declining on a year-over-year basis in 2012. The other 52 said prices would either rise or remain flat in 2012. Panelists base their home-price estimates on what they expect the Standard & Poor’s/Case-Shiller 20-city index to show.
Even the most bullish respondent in the late 2011 survey may have understated the actual 2012 home price gain, which won’t be tabulated and released by Standard & Poor’s until late February. Constance Hunter, the deputy chief investment officer of AXA Investment Managers, called for a 4.4% gain. In October, the Case-Shiller 20-city index stood 4.3% above last year’s level. (By March, Ms. Hunter revised down her forecast, calling for a gain of just 1.7% for 2012).
Housing to drive economic growth (finally!) – CNN Money – January 27, 2012
It is well known and well reported that the housing sector was a key force in the economic downturn. The sub-prime mortgage mess, foreclosures, home depreciation, construction stoppages were just some of the negative subjects related to real estate over the past few years.
For most people, their home is their biggest investment and with the value of that investment so goes their confidence. During the first six years of the 2000’s the United States saw a rapid rise in home prices (that’s what a bubble is called before it is recognized as such) and with that rise came a flooding tide of confidence that spurred the economy. During 2007 – 2011 just the opposite was true. With falling sales and falling prices confidence waned and everything from construction to appliance purchases suffered.
The economists surveyed also forecast that there will be just under 1 million housing starts this year — roughly matching the 28% rise in home building in 2012. Moody’s Analytics is forecasting much stronger growth — a 50% rise both this year and next year, which it estimates will create more than 1 million new jobs.
“There’s a lot of pent-up demand for housing, and very little supply,” said Celia Chen, housing economist for Moody’s Analytics. “As demand continues to improve, home builders have nothing to sell. They’ll have to build.” She said that growth in building will mean adding not just construction jobs, but also manufacturing jobs building the appliances and furniture needed in the new homes, which in turn drives overall consumption higher.
2012 Home Sales: Best In Five Years – CNN Money – January 22, 2012
Home sales in Boulder County were up 23% during 2012. For us this was the most sales since 2007. Nationally sales increased by 9% last year and were the best (in terms of number of sales) since 2007. Here are a few excerpts from the article.
Sales are being helped by a combination of strong market fundamentals — near record low mortgage rates, lower unemployment and a rebound in home prices, all of which are bringing in buyers into the market who had been waiting for it to hit bottom. The mortgage rates and years of depressed home prices have also combined to create the most affordable housing market on record, according to the Realtors group.
And the Realtors are predicting strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.
The “Realtors Group” refers to the National Association of Realtors.
The improved demand for homes in December led to the inventory of homes for sale to fall to 1.82 million homes on the market, the lowest supply since January 2001. One factor in tightening supplies is a drop in foreclosures and other distressed home sales, which made up only 24% of home sales in December compared to 32% a year ago. The tighter supply, and the drop in distressed sales, have helped to lift home prices so that the median sales price for the year rose to $176,600, up 6.3% from 2011. That’s the biggest gain in prices in since the bubble year of 2005.
It’s good to see that I’m not the only one expecting a strong year this year. As I predicted last year, we were one of the first markets to recover and our recovery was stronger than most.