Is your home really worth more today than it was last year at this time? Do you believe all of the hype you read in the news? The answer is probably yes it is worth more, but how much and will the statistics continue to improve?
After four years of decreases, it is uplifting to watch a gradual increase. Economists take the numbers and plot them out in the same directions with the hope of seeing better conditions. Are they correct?
The most important thing to remember is that home prices fell anywhere from 25-35 percent or more since the beginning of this latest economic downturn, according to the Price Shiller home price index. Only recently have indicators and statistics shown a rise in values.
The big question in real estate today is which direction home values are headed. There is no shortage of opinions on the subject. National Association of Realtors Chief Economist Lawrence Yun, during the National Association of Real Estate Editors conference in Denver a few weeks ago, said:
“This time next year, there could be a 10 percent price appreciation. I would not be surprised to see that.” So, should the seller wait to list in anticipation of commanding a higher home sale?
Not if one believes Morgan Stanley, in their latest housing report which estimated a “drop of 5-10 percent more”.
With home values rising even as little as 1 percent, homeowners that are only slightly underwater are profiting the most. The jump has been enough to move many homeowners back into positive territory and thus qualifying them for refinancing opportunities. Low inventory that is spiking the number of multiple offers is helping more than just homeowners that want to sell.
Corelogic reported a decrease of home owners with mortgages that were considered underwater on their mortgage from 25.2 percent, or 12.1 million home owners to 23.7 percent — or 11.4 million, Some of the decrease must be contributed to investors flocking to foreclosure auctions. Over 160 properties are considered for auction on a typical Friday morning at the Bellevue auction site.
"While the overall stagnating economic recovery will likely slow the housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk," said Mark Fleming, CoreLogic’s chief economist.
No one can dispute the fact that jobs, housing and the economy are inter-related. With the national unemployment rate hovering at 8.2 percent and statistics in the Seattle area in the 7’s, we are a long way from experiencing an end to our economic woes.
Analysts polled by Briefing.com, expect annualized growth of 1.2 percent for the quarter, down from 1.9 percent growth in the first quarter. This is the wrong direction.
Only 40 percent of companies reported sales above estimates with many companies adjusting projections of third quarter earnings downward. That's the lowest percentage since 2009, according to research firm FactSet.
Only when employers, from both large and small companies, feel secure in the requirements imposed by the government and begin hiring additional employees will we truly see stability in the housing market.
Joan Probala is the managing broker for Issaquah Windermere and has 30 years of experience in real estate, construction and sales. She is president-elect (2012) of the Seattle King County Association of Realtors.