8 Signs of a Real Estate Rebound - How is the North Shore Faring?

8 Signs of a Real Estate Rebound – How Is the North Shore Faring?

April 21st, 2010 by Anne West
Categories: North Shore market data, Real estate

I read an interesting article by Amy Fontinelle in the San Francisco Chronicle last night. It was called 8 Signs of a Real Estate Rebound and in it she talked about the eight signs of a recovery and how the U.S. real estate market was doing on each of them. The 8 signs are:

Pending Home Sales
Housing Starts
New and Existing Home Sales
Home Inventory
Housing Affordability
Mortgage Applications
Mortgage Interest Rates
Real Estate Mutual Funds

Her conclusion: signals are mixed for the U.S. market as a whole. Pending home sales are up (good). Housing starts are down vs. January but about even with February of last year (mixed). New home sales reached a record low (bad). Existing home sales are up (good). Home inventory is lower than last year (good). Housing affordability has improved (good). Mortgage applications are down (bad). Mortgage interest rates are still near historic lows (good). Real estate mutual fund returns are strong (good).

Although there are more positive than negative signs, it is hard to predict where the market will go from here because 1) we don’t know what impact the expiration of the home buyer tax credit will have; 2) even though mortgage rates are still very low, credit is still hard to get; 3) it doesn’t matter how low rates are, people who are unemployed can’t get a mortgage; 4) there is still that shadow inventory of looming foreclosures that will keep prices down and stifle new home construction.

How Does the North Shore Compare?
Real estate is local, so the big question is whether the North Shore mirrors the U.S. on key indicators.

Pending Home Sales: While the national pending sales number was 17% better than last year, North Shore pending sales were 69% higher than last year.

Home Sales: Home sales on the North Shore for the 1st quarter of 2010 were up 56% over 1st quarter of 2009.

Home Inventory: The inventory of homes for sale on the North Shore is down 9% vs. last year.

Prices: Average home prices on the North Shore are down 7% vs. last year. Not good for sellers, but may be enabling some people to move to the North Shore who were priced out of the market before.

Absorption rate: This is the measure of how many weeks it will take to sell the existing inventory at the current rate of sale. 26 weeks is considered neutral. Anything higher is a buyer’s market. The North Shore’s absorption rate was 70 weeks in March. High, but down 39% vs. March of last year.

Supply/demand ratio: This is the number of active listings there are on the market for every one that sells. At the ideal number of 6, homes are being sold for exactly the right price. The North Shore number is 16, which is high but improved over last year when the number was 26.

The conclusion: the North Shore is not out of the woods yet, for the same reason the U.S. is not, but all of the numbers are more positive than they were a year ago, and better than the national averages. Stay tuned as we monitor changes in interest rates, unemployment and foreclosures and their impact on the housing market recovery.

Tags: North Shore market data, North Shore real estate trends

This entry was posted on Wednesday, April 21st, 2010 at 1:10 pm and is filed under North Shore market data, Real estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.