Real Estate Blog
Friday, June 22 2012
Real Estate Market Continues to Rev Up
As we enter the summer months, the increased momentum and positive change that have characterized this year in real estate continue. Signs of growing strength of the national market are everywhere, as more and more economists report encouraging stats.
· Stuart Hoffman, chief economist at PNC Financial Services Group, went as far as to say that “Housing seems to be the one thing that’s doing better in this economy.”
· Existing home sales have been particularly strong. (See Exhibit 1.) According to the National Association of Realtors, sales of existing homes in May were up 9.6% over May 2011.
· Pending home sales are continuing their upward march. (See Exhibit 2.)
Everyday Americans, like economists, are also changing their attitudes. There’s a pent-up demand on the part of both buyers and sellers. Current homeowners are ready to become move-up buyers or vacation home owners. Renters are ready to become first-time buyers. Executives contemplating relocation are ready to make plans for the future.
There also seems to be a renewed focus on some of the more traditional views of the benefits of homeownership. A fascinating study conducted by psychotherapist Dr. Robi Ludwig and a major national realty firm concluded the following:
“We’re seeing a psychological shift.…We’re realizing that a home doesn’t solely equate to financial return…. Instead the home is the emotional center of our lives, and it remains a critical component of who we are. The feeling you get when you step through your front door or pull into your driveway is indescribable and priceless, and the same holds true for our children who crave stability….The emotional value of a home is still strongly recognized.”
This is an interesting trend that bears watching….
The Outlook for Long Island’s Summer Sales
Locally, our market continues to improve. MLS notes that pending sales for Suffolk County were up 9.7% in May over May 2011.
This indicates that excess inventory will continue to decrease, further strengthening the market. Eventually, we’ll hit that magic number and achieve a balanced market.
A major issue locally is that we are still feeling the effects of distressed properties. New York is one of the states in which courts delayed foreclosures, which in effect allowed the supply to back up. As reported in Newsday, May foreclosure filings were up by 50% in Suffolk and 34% in Nassau as compared to May 2011, according to Realty Trac. The downward pressure on prices will continue until the distressed properties being put on the market are sold. (See Exhibit 3.)
The good news is thar many of these properties are likely to be processed as short sales rather than as foreclosures. Also, because demand has been much greater in recent months, this new inventory will be easier to clear.
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