Vail Daily column: National real estate trends mirror local market
One of the more closely followed surveys of the real estate market is the Standard & Poor’s/Case Chiller 20-city index, which released an updated report recently, and the numbers were pretty eye-popping and downright heartwarming.
It’s a reflection of what is going on elsewhere in the country, and in many cases it will reflect what is going on locally.
Overall, home prices rose in the cities surveyed by 9.3 percent over a year ago. The study brings about several conclusions, all good news for real estate owners.
First, the tip between supply and demand is moving quickly toward a shortage of homes for sale, even in such hard hit markets as Phoenix, Las Vegas, Atlanta and Florida. The fear of the so-called “shadow inventory” of unoccupied homes suddenly coming on the market has proven to be a myth in all but a few areas.
Shadow inventory is a term that describes homes that are in foreclosure or already foreclosed on that have not come on the market yet. The only place this seems to be a problem is Illinois and New York, where the foreclosure process is extremely difficult for a bank to complete due to state laws, and foreclosures can, I am told, drag on for years in those states.
The most dramatic increases appear to be in markets with strong job growth (no surprise there) and in markets that saw the biggest declines. While many of these markets saw 50 percent or more declines since 2007, many segments are seeing double-digit increases far beyond national averages. Phoenix prices are up 23 percent and San Francisco is up 19 percent.
Some of this drama may be caused by the dramatic difference in sales prices between an empty, foreclosed home versus an occupied well cared home. In markets that for months depended upon foreclosed homes for any sales at all, the bottom of the trough was lower than it might have been in areas where foreclosures were a much smaller factor in the overall sales numbers.
Also of note is that traditionally nationwide sales and prices tend to slow down in the winter months, particularly in December during the holidays. In theory, few people want to bother with looking for a home during the holiday season, and few families want to move during the school year. But this year, activity remained strong in the markets during the December to March period.
Locally, things seem to be looking up. In the lower strata of the housing market (less than $300,000) inventory is steadily declining and sales are rising. I am seeing buyers write offers in a few days after their initial pre-qualification and in some cases are calling me wondering how far I can stretch their loan approval in terms of loan amount.
Chris Neuswanger is a mortgage loan originator with Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage-related inquiries from readers.