About a year ago, we started telling anyone who would listen that housing was at, or very close to a bottom in both prices and sales, and that those who would wait, might miss the best deals.
Here’s one example, from February 2009: The Fear Bubble May Cause You to Miss an Opportunity.
Now, over a year later, we are seeing confirmation of this bottom from too many sources to cite here. This, in short, is a market that is quickly turning.
Today, we’ll list the two most recent examples point at the Twin Cities metro area.
First, Jim Buchta at the Star-Tribune reports that New Home Sales have posted a year over year (that is, May 2011, compared to May 2012) increase in sales of 20%. And when it comes to new construction, sales are the number to watch. They’ll likely still finish the year with totals well below the historical norm for new homes, but this report, and others confirming a similar trend nationally are telling signs that the new construction market has passed the turn.
So why the bump? Our old friend supply and demand. From the article:
“In some parts of the Twin Cities, there is only a four-month supply of existing homes on the market, nearly half of what’s needed when the market is considered in balance…Inventory is down for new houses, as well. Across the country there’s a 4.7-month supply of homes at current sales rates, leading some to worry about a shortage…”
Catch that? Existing inventory is low, and gets snapped up fast, pushing many buyers into the waiting arms of homebuilders, who are stepping in to fill the supply vacuum.
In addition to impacting sales, thin inventory is predictably having it’s way with prices:
“…in the Twin Cities metro, the median price of new homes that closed during May was up 2.9 percent to $300,000, according to the Minneapolis Area Association of Realtors…Prices of existing homes were up a healthy 10 percent, largely a reflection of declines in less-expensive foreclosure and short sales”
This is what a recovering housing market looks like, folks.
And for what it’s worth, and despite the flaws (lagging indicator, imperfect methodology, as in all housing indices) today’s Case-Schiller also shows the Twin Cities home prices on the rebound, jumping 3.8% since last year.
Now, none of this is to say that you are going to get your 2006 price back. It may still be decades before we recoup the 30% plus loss in value from 2006-2010. And with a still stunted economy, the road to full recovery may prove a little bumpier that current data suggest.
But this is clear: As we predicted a year ago, the worst days of the housing market are behind us. THAT is a story worth telling.
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