After so many months and years of lingering economic gloom, it is understandable that we are looking for any signs that might indicate even the slightest reversal and uptick in housing construction and sales.
Perhaps my optimistic observations about some things that seem to be going on locally with NEFAR and NEFBA is because of my own eagerness to grab on to positive news.
But I do think it is very interesting that the recent Realtor Builder Tradeshow had an increase in the number of vendor booths and higher attendance than the last few years.
NEFBA had a large and enthusiastic crowd for its Gala this month.
And NEFAR is reporting that attendance and interest in its meetings have picked up significantly.
Are these indicators that people are beginning to sense that things are improving; that we've finally bottomed out? Or, does it have more to do with summer being in our rear view window and this is just the expected increase in pace that comes with autumn?
If you look around at what's happening around the nation, you can begin to think that the days we've endured since the housing crash in 2007 may be behind us. We're a long way from out of the tunnel, but just maybe we can see flickers of light up ahead.
• Nationwide, the median price of a new home was up 17 percent in August compared to a year earlier, while existing home prices were 9.5 percent higher.
• New filings for foreclosures are at a five year low. Unfortunately, studies show that Florida is still in deep water where one in every 117 homes was in some stage of foreclosure in August.
• New home purchases in September hit the highest level in two years. Also in September housing starts were at the fastest pace since mid-July.
• The National Association of Realtors has reported that August and September were the hottest back to back months for existing home sales since mid-2010. More than 4.8 million previously owned houses were sold in August and over 4.7 million sold in September.
• The Commerce Department says U.S. builders started construction on more single-family homes and apartments in September since July 2008.
While these are all positive reasons to be optimistic, there are still some sobering reminders that we still have a mountain to climb.
• Construction is a reported 82.5 percent higher than the low in April 2009, but it remains below the healthy 1.5 million rate.
• New home sales are less than one-third of the pre-recession peak: more than 1.2 million per month.
• The National Association of Home Builders/Wells Fargo builder sentiment index hit 41 and is the highest since 2006. However, until readings exceed 50, respondents view conditions as poor.
I think we all need to remember that we've been here before.
It's hard to imagine now, but in the late seventies interest rates hit 18 percent and shut down first time home-buyers.
Then, we had to deal with the Tax Reform Act of 1986 which walloped the real estate market.
Chances are that when this recovery is complete, sooner or later we'll be back in some kind of economic fix again.
So, how will we know if the incremental improvements we are seeing now are for real and can be sustained?
When will we know for sure that we can come out from under the covers with confidence?
Elizabeth Weintraub, who has been a high profile California real estate broker for three decades, has listed her top 10 ways to know if the housing market is really improving. I want to share them with you.
#1: The Job Market Recovers
When you hear your neighbor's car pulling out of the garage in the wee hours of the morning after months of no activity, you'll know that your neighbor got a job. When the unemployment rate drops and people return to work, the housing market is recovering.
#2 For Sale Signs in the Neighborhood Vanish
Too many for sale signs in your neighborhood means there are too many homes for sale and generally not enough buyers to buy them. Excess inventory pushes down sales prices.
#3 Median Sales Prices Stop Falling
It doesn't matter whether you track home sales by per-square-foot price, average or median prices, when the market is depressed, they all fall. Compare median sales prices this year to median prices last year. Steady increases mean the market is improving.
#4 Starter Homes Sell Faster
When demand is on the rise, homes sell quickly and the days on market are reduced. A starter home that is attractively priced in good condition and a desirable location should typically sell within 30 to 60 days.
#5 Closed Businesses Reopen
Little shows more faith in a budding economy than when entrepreneurs strike out and open a new neighborhood business. When you spot the boards coming off of a closed up shop and a new sign goes on the building, it means a recovery is underway.
#6 Improving: Distressed Sales Disappear
When you no longer have to ask if the home for sale is a foreclosure or a short sale, the market is turning around. When traditional sellers feel the market is stable enough, they will put their homes on the market because those sellers will have equity.
#7 Improving: Real Estate Companies Hire Agents
In down real estate markets, real estate agents tend to leave the business in droves and real estate companies downsize. When business is improving, real estate companies expand and hire more agents because their phones are ringing with floor calls from buyers.
#8 Interest Rates are Attractive
When financing is scarce, the cost of lending that money goes up. When plenty of money is available to lend, interest rates fall. Lower interest rates equal a higher purchasing power for buyers and stimulate the housing market.
#9 More Buyers are in the Market
The National Association of Realtors' Housing Affordability Index tracks the percentage of buyers who can afford to buy a home. The higher the percentage, the lower the income that is required to qualify for a mortgage.
#10 Sellers Buy Move-Up Homes
During troubled times, typically the only sellers who sell a home are those who must due to circumstances beyond their control such as a job transfer, divorce or they can't afford to make their mortgage payment. Many of those sellers do not buy another home. The move-up market becomes stagnant. In a more balanced market, it's not only a good time to sell but also a good time to buy a home.
As we continue to hope we're on the way to full recovery, why don't you use this list of 10 tips to measure where you really think we are in Northeast Florida.
If you have others that you think should be added, you know I like to hear from you. Email me at firstname.lastname@example.org
In the meantime, I am going to choose to remain cautiously optimistic.
— Jim Bailey is publisher of Realty/Builder Connection and president of Bailey Publishing & Communications Inc.