May 3, 2011 by MSI
Each month many Americans await the
release of real estate numbers from the
National Association of Realtors® (NAR),
as these figures impact us all in so many ways. Since the real estate peak in
2005, we have anxiously awaited a true sign of recovery. While percentages may
tick up slightly and we listen as NAR’s Chief Economist, Lawrence Yun
reiterates that sales of existing homes have increased in six of the past eight
months; the reality of it is that we are still a long way from recovery.
While sales of existing homes in the
U.S. increased 3.7 percent in March versus February, the numbers were still
down 6.7 percent from March 2010. And, prices continue to drop as well, with
the media home price reaching $159,600 in March, down 5.9 percent from 2010.
The Census Bureau reported an annual sales rate of 300,000 new homes in March,
which is better than the all-time low (since the government began tracking of
this data in 1963) of 270,000 from February, but still most definitely not an
indicator of market recovery. To put the current market in perspective, at the
peak of the real estate boom in July 2005, that number exceeded 1.5 million.
In reality, is it really about new
home sales or are their other factors, albeit related, that are contributing to
holding back a real recovery. Two critical factors continue to prevent
recovery. First is the strict lending policies, making it much more challenging
for individuals to obtain a mortgage. Today, the average credit score
requirement for a conventional mortgage is 760, while it was 720 just four
years ago. And, of course, we’re still fighting the foreclosure market. While
foreclosures stalled a bit at the end of 2010, there is still a steady stream
of inventory entering the market each month; competing with the sale of new
homes and increasing overall inventory or supply.
As we approach what is typically a
very busy spring market, will we experience the uptick traditional for this
time of year? Early indicators say yes, but only time will tell.
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