Which way goeth the housing market? The Case-Shiller Report was released today, and it generated various reports, including the following headlines.
From CNBC: [Thanks L!]
and from ZeroHedge:
In both articles we are seeing selective data pulling, so to try and be more objective, let’s look at the chart of home prices:
While prices are up YOY, it is hard to determine a strong trend based on the index alone. So what is happening with home sales? According to the National Association of Realtors, (NAR) home sales are up 13% over last year, but they have concerns about available inventory, and it is inventory that is going to determine what happens in 2013.
Why? Because Lenders have artificially restricted supply. Foreclosures take, on average 414 days. In some areas it is taking much longer. In New York, for example, the average length of time is 1089 days. When homes are foreclosed on, not all of them are listed by the bank. For example, I live in the Austin, TX area where there is currently only a 2.7 months supply of homes on the market. In spite of that, there’s a home in my neighborhood (Nice neighborhood, home needs some work, but not in bad shape) that has sat empty, bank owned for over two years. It may be only one house, but I’ve seen a number of similar houses, but no solid numbers on how many properties like this there are.
If lenders continue to limit inventory, they may well drive a bubble in 2013. Some areas like Phoenix have already seen a recent buying frenzy, although it appears to be cooling. Should foreclosures ramp up or the economy cool off, however, we could see the recent “solid improvement” fizzle.
What is the trend then for the 2013 housing market? Uncertain. It’s liable to be a few more months before a solid trend can be detected.