The US residential real estate market seems to be moving along nicely with sales and prices rising over a lengthy period but it is the underlying data that shows how resilient the market is likely to be.
It is indeed good news for the housing recovery that the latest data from the National Association of Realtors (NAR) shows that existing home sales increased in June to their highest pace in over eight years and the cumulative effect of rising demand and limited supply has helped push the national median sales price to an all-time high of $236,400.
Sales increased by 3.2% and all regions experiencing sales gains in June and have now risen above year on year levels for six consecutive months. Also, sales are now at their highest pace since February 2007 and have increased year on year for nine consecutive months and are 9.6% above a year ago.
It seems clear that buyers have come back in force, leading to the strongest past two months in sales since early 2007 and this is being helped by over a year of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy.
According to NAR president Chris Polychron, real estate agents are reporting drastic imbalances of supply in relation to demand in many metro areas, especially in the West. The demand for buying has really heated up this summer, leading to multiple bidders and homes selling at or above asking price and tight inventory conditions are being exacerbated by the fact that some home owners are hesitant to sell because they're not optimistic they'll have adequate time to find an affordable property to move into.
On top of this fewer homes are being sold under priced. Foreclosure inventory has fallen for 43 consecutive months, year on year, down to just 1.3% of homes, according to the latest data from CoreLogic which shows that nationally foreclosure inventory fell by 27.4% in May compared with the previous year to approximately 491,000 homes.
The housing market negative equity rate in the United States is also falling. Some four million US home owners owed the bank at least 20% more than their properties were worth in the first quarter of 2015, according to the latest report from real estate firm Zillow.
Overall the national negative equity rate dropped to 15.4% in the first quarter, down from 18.8% in the first quarter of 2015. The data also shows that the rate of negative equity improved in all of the 35 largest housing markets in the first quarter of 2015, a sign that, metro by metro and home by home, the country is continuing to recover from the lax lending rules and subsequent housing market bust of the last decade.
At the peak of the real estate crisis, more than 15 million home owners owed more on their mortgages than their homes were worth, putting them in negative equity. Foreclosures, short sales and rapidly rising home values freed nearly half of those home owners, leaving 7.9 million home owners upside down at the end of the first quarter of 2015.
But home owners do not seem to be convinced by the figures. The most recent Zillow's Housing Confidence Index shows that 25% of Americans think there was no growth in home values last year, when in fact, home values grew 4% nationally and by double digits in more than 65 metros across the country.
The divide between what home owners thought happened to home values and what actually occurred was especially notable in Florida. In 2014, home values in South Florida grew by 12%, or nearly $23,000 per home, yet 22% didn't think values changed at all. In Tampa, home values were up 9% or $12,300 in value, but 45% of Tampa residents still think home values remained flat or fell.
Bostonians had the most people at 23% who correctly judged how their home values had changed, or in their case, not changed. Unlike the other metros surveyed, Boston home values really did stay flat. While most metros had people underestimating how much home values grew, 64% of Boston residents missed the mark in the other direction and overestimated home value growth.
People in Washington, DC had the best sense of actual home value growth over the past year, with 21% of people able to accurately identify that DC home values rose between 1% and 3% when they actually rose 1.8%. Still, more people, 28%, thought home values stayed flat.
So while the US homes market is ticking along nicely, it might take more to get that message across to buyers and sellers.
Property Wire
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