July's MLS sales figures for Clark County were stellar

The numbers are in for July from our local multiple listing service and they look great. Looking back first at last year, July 2012 was healthy but not stellar. Inventory was starting to tighten up and demand was strong enough in certain segments to generate multiple offers. 499 transactions were closed in July 2012 for Clark County against this year's total of 696. We are still well off the frenzied pace of 2005-2007 but clearly the best we've seen since "the crash".

Evaluating numbers is never as easy as just looking at the one or two "big" stats. Often people, including some Realtors®, look at median price or total unit sales as an indicator that all market segments are moving equally. Just because the median price is up 21% by no means suggests that any random house that was sold last year is now worth 21% more this year. The real estate market is very complex with neighborhood fluctuations, locations, home size, price range, and styles often performing independent of each other based on market demand or supply.

The chart below shows the "big" over all county stats for this local market and then breaks the numbers down a little further to show some broad segment trends. The big question for John and Sally homeowner is often geared towards, "can I sell MY house right now"? If John and Sally own a condo they may not be much better off this year than they were last year in market appreciation. The condo market is almost always late to recover.

Last year the sales figures were heaviest in the entry level market. Those $125-150k three bedroom ramblers were being snatched up and as such, supply tightened up and prices soared. This year that market segment was priced high enough that demand slowed down a little, but the middle market surged with larger four bedroom houses seeing significant increases in unit sales. Those bigger mid sized homes saw a massive 59% increase in sales but a more modest 13% increase in median price.

Last year I said that the bottom has to tighten up first before the middle can take off. Well, the bottom did tighten up and now the middle is taking off this year. That is driving the increase in median price. The smaller two bedroom houses have peaked with only a 1.3% increase in median price despite a large surge in unit sales of 46%. Even the bread and butter three bedroom market that was red hot last year, is showing preliminary indications that the buyers are nearing their limits. The 18% increase in median against a large surge of 29% in units sold is still quite robust, however. The sellers in the entry level often move up to that bigger house and as they sell their 2 and 3 bedroom homes they move into the middle market. The 59% increase in unit sales in that segment will likely produce more impressive median increases when we check the numbers in a few months.

Of course this discussion has to hinge on keeping other complex variables favorable, such as the general economy, jobs and the ever critical mortgage rates.

The big takeaway for homeowners is the fact that their home that may have been upside down or too tight to sell, could in fact be a seller today. Contact your favorite Realtor® for a Comparative Market Analysis on your home. Most offer this service for no charge, I certainly will.

   
         

CoreLogic: Rapid Rise in Home Prices 'Remarkable'

This just in from the National Association of Realtors®

DAILY REAL ESTATE NEWS | WEDNESDAY, AUGUST 07, 2013

During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable."

In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.

The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.

Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.

Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.

The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:

• Nevada: +26.5%
• California: +21.4%
• Wyoming: +16.7%
• Arizona: +16.2%
• Georgia: +14.3%

Source: “Home Prices Rising at Fastest Pace in 36 Years,” Mortgage News Daily (Aug. 6, 2013) and “Home prices rise again, but at a slower pace,” USA Today (Aug. 6, 2013)

Rod's two cents: I think we will continue to enjoy a robust and healthy appreciation over the next 12-18 months.  I don't think it will continue at these break neck speeds, however. Interest rate volatility and a slow surge in new resale inventory as homeowners right the ship financially will balance things back to a healthy but modest rate of growth in the middle single digits.

Keeping an Eye on the Market

I wrote this article for the Equity Northwest Properties Blog this morning and decided to re-post it here for you.

There is a huge inventory of homes that were purchased at or near the height of the market from 2004-2008. The average homeowner moves every seven years so many of these homeowners that bought at the peak are getting towards that "time to move" point. The problem is that values for many of them are still not quite high enough to clear the loan obligation. Many of these would be sellers are sitting on the fence patiently waiting for the market to yield the price they need to exit clean.

For Realtors® and sellers this is a 'watch the market' time. We enjoyed a robust 8-12% gain in values over the last twelve months. If this upward pricing trend continues, many homeowners will finally exit the proverbial tunnel and be able to sell their home and clear all liens and fees.

Our local market and many other markets around the nation are seeing tight inventory, especially in the entry level price range. This is driving an increase in price. Low interest rates are also helping to keep demand relatively high. As these 'top of the market' homes become viable to sell again, we will see less of a squeeze on inventory. This can be a bit precarious, too much inventory may cause prices to flatten out if demand does not keep up. So long as interest rates remain at or below 5%, I believe the market will continue its growth, even if inventory levels fatten up. A combination of higher rates in the more normal range of 6-7% and bulkier inventory would likely cause the prices to stop rising or at least severely slow down.

What does all this really mean? For buyers that really want to own, rather than rent, now is truly the time to buy. Rates are low and there is no guarantee they will remain low. Prices are rising but still relatively low. For sellers, things are a little dicey at the moment. Selling now could be the genius move of the decade or it could be one of those "oops" I should have waited situations. No one really knows what this fragile market will do. If you are a owner occupant seller and you actually want to move then selling as soon as possible makes sense. If you are selling based on an investment then you are forced to gamble a bit. Wait or sell? For an investor I would wait a little longer but of course that may or may not pan out. In the end, I believe real estate should be a long term investment and waiting will rarely cost you money, it may just cost you some time.

Sellers and would be sellers should remain 'market engaged'. In other words, pay attention. Things are moving in generally positive directions and the opportunity to sell will present itself soon. Potential sellers should stay in contact with their favorite agent or broker and 'keep and eye on the market'.