Big news today. Existing home sales for February beat street expectations by alot. But if you've been reading my blog, this is not news, as it is exactly what I've been telling you… that the housing market is bottoming in many of the hardest hit areas of the country. (Read more here: Investors: Is the Market Getting Better or Worse? and Bernacke Throws Investors a HUGE Bone.)
And now is a time that I haven't seen in my 25+ years of investing… where it is actually easy to buy low (when you buy the right product) and easy sell fast at the same time! Check this out…
February national existing-home sales posted their largest month over month percentage increase since July 2003 in February, INCREASING 5.1% to 4.72 million. The street estimate was for DECLINE of 0.9%. Boy were they wrong.
Most of the increase in buyer traffic occurred in the latter part of the month after the $8,000 first-time buyer tax credit was put in place. At the same time, mortgage rates are at levels not seen in over 30 years and mortgage purchase applications have risen dramactically. Imagine what March numbers will look like after a full month of buyers take advantage of the tax credit and affordable financing available. And Spring buying has just begun. Wow, the housing market is looking better and better.
Foreclosures, a lagging indicator, are still adding to housing inventory, while builders have stopped building. The net result is housing inventory increased slightly to 3.798 million (a 9.7 months supply nationwide). In the six months prior to February, the total number of homes for sale had steadily declined from a record level last July. Inventories are now 777,000 below the peak, which was set in July (4.575 million).
The recovery in the West was much stronger than expected.
“Strong sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years,” said Lawrence Yun, NAR chief economist. (Read my posts last week on this here: SoCal, Housing Bottom is Near, If Not Here; NoCal, Housing Sales Up 6th Straight Month; Reno/Sparks Investors: Housing Turnaround Underway )
February Regional Existing Home Sales Breakdown:
West:
Increased 2.6 percent and remain 30.4 percent higher than a year ago. The median price in the West was $204,600, which is 30.3 percent below a year ago.
Northeast:
Jumped 15.6 percent but are 14.9 percent below February 2008. The median price in the Northeast was $251,200, down 4.8 percent from a year ago.
Midwest:
Increased 1.0 percent but are 14.0 percent lower than a year ago. The median price in the Midwest was $131,000, which is 7.8 percent below a year ago.
South:
Rose 6.1 percent but are 11.2 percent below February 2008. The median price in the South was $146,700, down 10.0 percent from a year ago.
The housing turnaround will continue this year for a number of reasons — but the most understated and least talked about reason is the one that is most important — builders have stopped building and the population is still growing.
*People need shelter and will occupy empty space either by buying or renting.
*Government incentives to purchase a home ($8,000 first-time homebuyer tax credit).
*Efforts to boost affordability (the Fed's mortgage-backed securities purchase program) and those geared toward unclogging the financial system (the Public-Private Partnership Investment Program, or PPIP).
The end result will be each month's existing home sales reports showing inventory of vacant homes decreasing. Plus homeowners will benefit from increased cash flow which will in turn reduce future foreclosures.
Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”
And that's the AVERAGE discount. Most folks simply buy on the MLS with an agent and shop for already discounted deals. The problem is, in many places they end up in a bidding war with others doing the same. That is NOT how you find the deals! My clients are buying 30-50 percent below market, finding foreclosure deals on our site that are NOT listed on the MLS and negotiating their own deal at much bigger discounts.
Find out how next Wednesday in my Free New Investor Webinar on April 1st (no fools here) at 6pm Pacific. You must register early for this event as we do fill up quickly. More Here.
|
|
|
|
|
 |
