Ugh. Not to complain but, my gosh there’s a lot of information out there to digest when it comes to housing isn’t there? I’m in this everyday and I struggle, so I can imagine how tough it is for buyer’s and seller’s to make any sense of it. Well here goes…
Today we get a jump in New Home Sales, once again exceeding expectations. Recently I blogged that builder sentiment was up and now we know why; they’re selling more homes. Add to that the reality of fewer permit applications and we are headed for a shortage of new construction. Good for builders and ultimately very good for the economy. Building after all, has long been the engine that fuels economic recovery.
Yesterday we also got the updated S & P/Case-Shiller report on home prices based on their matrix of a 20 major city, 3 month average. Prices declined for the first time in California in over a year. This is a difficult stat to make sense of. On the one hand, the glass half empty folks will point to the rising foreclosures, end of the tax credit and high unemployment as reasons for this and the inevitability of continued price declines. The glass half full people like me, think this is more a reflection of seasonal trends and what should be an expected bumpy ride along the bottom. While I do not think we are poised for any real appreciation any time soon, at least not until the employment picture improves, I do think we can look to history for answers and the recovery in the 1990’s had similar characteristics: a rapid and prolonged decline; an extended trough at the bottom; a gradual climb out and then a meteoric rise. If I was a betting man, that’s where I’d place my money.
The other bit of news was the rise in filed California NOD’s (Notice of Defaults – the first step of the foreclosure process). This is not good news, yet I am not overly concerned. Why? Because the banks have said for some time that they are accelerating the foreclosure process now that the federally mandated moratoriums are over. Further, if you focus on the breakdown of locations, your see that the high desert and inland empire remain bloated with distressed property while the Valley and the coastal areas are fairing much better.
So once again, we find there is no shortage of data, or varying opinions. Suffice to say, real estate remains local and over generalizations need to be viewed with skepticism.