Mixed Results: U.S. Housing Market Resembled the 2014 World Cup in June
Mixed messages from housing data released in June require a closer look, much like World Cup soccer results from Brazil. From a rain-soaked soccer field in Recife, an American spectator offered this explanation to tens of millions of viewers back home, “Germany beat us 1-0, but I feel happy. We advanced, although we lost, so we really won.”
It sounds somewhat like the current housing market.
Mixed data is being studied by home buyers, sellers and industry experts. Mid-year releases issued from the National Association of Realtors, S&P/Case Shiller, Trulia and other housing analysts show that the housing recovery is on track while other reports issued simultaneously indicate that the U.S. housing recovery has slowed. Both are accurate; signals are mixed.
Moderate slowdown is seen as positive. Dr. Jed Kolko, Trulia chief economist explains, “Sales are picking up but prices are slowing down, and both of those are a good thing.” Kolko indicates that in order to avoid another housing bubble, we don’t want to see prices continue to accelerate. So the housing market is recovering, but not in recovery.
Key performance indicators show that inventory is tight in a lot of markets, however, prices rose less than expected. In fact, prices rose at the single slowest pace since March 2013. Foreclosures are down 40 percent year-over-year, which is good news, as that’s a necessary part of housing recovery.
Despite the large decline in distressed sales, vacant homes are still out there. Furthermore, until there is sustainable improvement in job report numbers around employment for Millennials, new household creation is stalled. Without good earnings, Generation Y cannot save enough to move out of parents’ homes and rentals in order to approach the first rung in the housing ladder.
Further data released in late June shows single-family new home sales up 18.6 percent, to a six-year high. And, sales of existing homes are also up nearly five percent, the highest rate since October. However, applications for new mortgages showed a deep dive in mid-June.
Was everyone glued to the World Cup action just too busy to talk to lenders? And could this dip in activity suggest an impending late summer slowdown in home sales?
While soccer enthusiasts concentrate on FIFA standings, realtors are crunching the numbers to provide insights for both buyers and sellers in their markets. Even in hot markets such as the San Francisco Bay Area where multiple, competitive bidding is currently commonplace, getting both the asking price right for sellers and the offer right from buyers is essential.
“Buyers can easily overpay when markets heat up. The key for a buyer is to avoid falling in love with a home, but to think of it as a business decision. It’s a difficult thing to accomplish, so guidance from a knowledgeable agent is crucial,” says Kevin Markarian, a San Francisco real estate broker. Winners and losers, highs and lows can shift suddenly in fast-paced situations. As soccer fans know, so it’s best to keep your eye on the ball.
Laurie Jo Miller Farr loves walkable cities. A tourism industry professional and transplanted New Yorker by way of half-a-lifetime in London, she’s writing about the best of the bay and beyond for Yahoo, USA Today, eHow, and on Examiner.com.