The first day of fall came this week, that was about the only good thing. The stock markets are in pandemonium, the real estate market is on its butt and the jobs market is by most measures, hovering around 15% unemployed, and still about 2 years from recovery. A friend just told me that liquidity is when you look at your retirement funds and wet your pants
The Wall Street Journal had a compelling headline on Thursday—one of those “standing heads” that they can bring out and dust off to reuse as needed. The headline, “Home Resales Up, But Remain Weak”. The story goes on to say that the sales of previously occupied homes has risen to the highest point in five months (of course five months ago we all thought home sales sucked, but apparently the ensuing five months of Summer were worse).
“Despite the monthly increase in sales,” the Journal continued, “the US continues to struggle with the aftermath of the worst housing bust in decades. Last year was the worst year since 1997. This year’s sales are on track to be slightly better.”
Home prices are expected to drop 2.5% this year, and then begin a slow rise of 1.1% annually through 2015. (This should be real growth, not adjusted for inflation) The International Monetary Fund concurs with these predictions and has cut its 2012 growth forecast for the U.S. to 1.8% from 2.7% based on the weakness of the housing market.
Lots of the reporting of home sales is confusing because we tend to think of houses for sale as a single grouping, but for reporting purposes, there are subsets, and the largest of these is the so-called “Previously-Occupied” homes, so this is the best measure of how the real estate marketplace is doing--as opposed to car sales, where “previously driven” would not be a good measure of sales. New car sales ring the biggest bell in that reporting category.
But it’s not all gloom and doom because the numbers the Wall Street Journal reports are national numbers and we live locally. Home sales by region vary tremendously; sales in the West were up 18.3%, in the South 5.4%.
And inventories of homes for sale have dropped over the last few months as well. Two weeks ago there were 3.58 million homes for sale across the United States, which at the present rate of sales is an 8.5 month supply. To give you a benchmark, in a healthy marketplace, there would be about a 6 month supply, and during the “go-go days of the 2003,4 and 5” we had about a 3 month supply, meaning a house that was listed today—on average—would be sold and a new family would have moved in within 90 days. In the “bubble days” it went even faster.
I just drove between Florida and New England, and I can share first hand knowledge that there were very few moving vans on the road, I saw perhaps only a handful in 1700 miles, there were a few more U-Hauls and pick-ups with tons of stuff in them, but real family relocation moves seem to be few and far between.
There were also lots of for sale and for lease signs on what appear to be large factory type commercial buildings all along Interstate Route 95. And probably 35% of the outdoor billboard signs are unrented, painted out white, or offering “This Space Available”
And so it is that in September 2011 we are paying the price of the excesses of the last decade. As we lick our wounds and console one another by saying, “we’re all in the same boat”, look ahead the 14 months to the next election and demand of our politicians more and better candidates. Demand a business-friendly administration. Demand new jobs even at the risk of loosening environmental regulations. Demand that we renew our quest for energy independence. (Even the shrill voice of Sarah Palin squawking, “drill baby drill”, has merit.) And finally, if you are interested in your future, demand a simple and fair tax code at the same time.
Dane Hahn is a real estate professional with Tarpon Coast Realty in Englewood, Florida. He can be reached at 941-681-0312 or at firstname.lastname@example.org. See him on the web at http://www.danesellsflorida.com/