Love's Real Stories

Dear Real Estate,

What’s going on in the Real Estate market these days? We’re confused by the reports we get. The information seems conflicting.

– Confused

Dear Confused,

Conflicting Real Estate headlines are marching across websites, blogospheres, newspapers, magazines, and everywhere else headlines congregate.

For example, witness these contradictory headlines, which appeared within days of each other: “Home Sales Slow Down“ as opposed to “Home Sales 19% Higher.” And “Sales Prices Inching Up” as opposed to “Prices in Sharp Decline.” And “Buyers in Short Supply” as opposed to “Buyers Abound at Record Levels.” Anyone not confused by these must be confused.

Granted, markets are hard to read. Not to be forgotten however, is the lesson learned from my chalk-covered, eraser-clutching Professor of Economics. “All markets are local!” he would bellow. Bony finger in the air, one eyebrow raised, flecks of foam at the corners of his mouth, he stared us down. “All markets are local!” he repeated. “Forget the national headlines!” We the student body responded to his maniacal enthusiasm in appropriate fashion, slack-jawed and dim-lidded. The good professor held the sides of his head, shuddering at the futility of attempting to instill this critical concept into such a thick-skulled body of students.

The Professor’s efforts were not squandered, however. His lesson is forever embedded in at least one thick skull, burned into bony matter as if with a branding iron: All markets are local!

With that concept in mind, Confused, we sought the answer to your question by jumping in the trenches and interviewing real-life practitioners of local real estate:

Q.: What’s going on in the local market these days?

Local Realtor: Much busier than six months ago. More calls from sellers now. We’re list-pricing aggressively and selling successfully. Plenty of buyers, too, with multiple offers in many situations.

Q.: Is it easy?

Realtor: Very funny. No. Escrows take as long as they ever did, and are at least as complicated. Buyers have a hard time qualifying for loans. Loan underwriters demand repairs even if buyers don’t. Appraisals come in low. Short sales still take forever. I’m working harder than ever.

Q.: What’s the good news?

Realtor: We realtors are working well together. Teamwork is getting the job done.

Q.: When will the market change?

Realtor: Can’t say. Working hard feels good right now.

Less confused, Confused? Stay away from national headlines, they’re confusing. Remember, “All markets are………………!”

The housing market is in “full recovery mode” according to the National Association of Realtors. The proof, they say, is in the number of pending home sales, which rose more than 3% last month over January. That’s 12% higher than a year ago.

Pending home sales are measured by the number of signed Real Estate contracts in which all contingencies have been met, making it a valid indicator of a future home sale.

The Pending Home Sales Index now sits at the highest level since June 2013.

February’s rise over January gave a clear sign that cold weather had little impact on motivated buyers across the country, despite the predictions that freezing temperatures and piling snow would keep them indoors and out of the marketplace everywhere but the dry West. The Midwest was a standout. Pending home sales jumped 11.6% last month, a nearly 14% increase over last year.

“Several markets remain highly competitive due to supply pressures,” said Lawrence Yun, NAR’s chief economist. “The return of buyers this year will depend on how quickly inventory shows up in the market.”

But inventory is down across the country. Homeowners have been slow to trade up, or even downsize, leaving a skinny market for buyers looking to make the move. Still, NAR is forecasting a 6.4% increase in existing-home sales this year, and a price increase of 5.6%.

February pending home sales dropped slightly last month in both the South and the Northeast, but the South is still nearly 11% above where it was last year, and the Northeast is 4% above last year. The West is the strongest performer, with a 6.6% increase last month and up a whopping 18% from last year.

NAR says a big factor in this recent buyer demand is rising consumer confidence. In fact, consumer optimism about the economy in general, according to the Consumer Confidence Board, hit a 10-year peak in the first quarter of 2015—its highest level since 2004, before the “Great Recession”.

“The strength of confidence, along with an improving jobs market, indicates that real consumption growth will accelerate over the coming months,” says Paul Ashworth, chief U.S. economist at Capital Economics.

When people are feeling good about the economy, they tend to start checking out interest rates and thinking about buying houses. Interest rates are low, so all the more reason for buyers to get up and go.

Now sellers need to get up and go and put their houses on the market for these hungry buyers.

The pendings are depending on it.