Good news. The S&P Case-Shiller Home Values Index, for the second month in a row, gave us a positive reading. Admittedly, it’s a small positive reading (up 0.2% in the February and up 0.1% in the March 20-major city readings) but even small is significant here. This is one of the most closely-followed indices there is.
Year-over-year, there was a 2.6% rate of decline – still headed south, but by the smallest amount since December 2010. Looking closer at the details, Bloomberg.com noted, “Phoenix is really on the rebound with Miami, Tampa, Minneapolis and Dallas all showing a run of stand-out strength. But Atlanta shows continued contraction as does Chicago and New York.” (The Phoenix real estate market is getting a lot of positive press of late.)
Bloomberg.com concludes: “Unadjusted data show no monthly change in March and, like the adjusted data, minus 2.6% contraction for the year-on-year rate. Home prices may finally be moving up from the bottom, and more recent data on existing home sales show a sharp upward spike in prices underway, the result of fewer distressed properties on the market.”
And there we have what may prove to be the biggest news of the moment (unless you happen to invest in Greece’s sovereign debt); we’re seeing fewer distress property transactions than we expected to. They’re just not having the impact of the market that we anticipated. As a result, the real estate market is improving at a faster pace than was expected.
Now, this doesn’t mean it’s necessarily safe to jump into the deep and rocky waters. There are still sharks out there. But it does mean that the waters are surprisingly smooth, and it’s looking more and more like a recognizable (dare I say “normal”?) real estate market.
By the way, Zillow.com last Friday reported great sales and rental figures for the month of April. Zillow computed a 0.7% rise for home values.
“This is the largest monthly increase in home values since January 2006, and it makes April the second month in a row in which home values climbed up,” noted Tory Barringer at DSNEWS.com. And rental rates climbed by a rather dizzying 1.6%. As with the S&P Case Shiller Index, the growth in home prices was very strong in Phoenix (1.9%); it was also notable in Fort Lauderdale. But prices in certain markets, such as Atlanta, GA, remain motionless or worse… Reminding us that, as always, Real Estate is always LOCAL.
Zillow also said that 6.4 of every 10,000 homes in the U.S. are in the process of being foreclosed on. But that is down from 8 out of every 10,000 homes a couple months ago in March.
As we’ve discussed before, there is real reason to watch the effects that distress properties continue to have in this market. But there is also ample room for us to celebrate a brighter real estate recovery at this point than we were expected to see. Doomsday economists not yet ready to admit their err in projections may not be paying quite enough attention to the fact that this will be a self-fueling recovery in which every advance in the number and quality of sales is likely to inspire more buyers into the marketplace, as people make sure they don’t miss out on the disappearing bargains and super-attractive financing.
~ Greg Cowart