The National Association of Realtors reported today that existing home sales rose 2.4% in May, bringing in a second month of gains in the housing market. Additionally, the number of foreclosures comprising the resale market has dropped. Those are both very good pieces of news.
Yet the coverage of this news is almost entirely negative because economists expected slightly better results.
If you’re like me, you now tend to discount the way the news media tells you to interpret this news. Frankly, I don’t care that the economists got their predictions wrong. What I see is that the housing market does appear to be improving.
It appears that the residential real estate market may have put in a bottom for this year. The question becomes: What does this news mean for active real estate investors?
I am not an expert on predicting the movement of the real estate market. But based on the empirical data I’m seeing, I might be more inclined to begin buying residential real estate at wholesale prices only. I’ve not been comfortable with any type of residential real estate acquisition during recent months – not even wholesale acquisitions – simply because last month’s wholesale deal was likely to become this month’s overpriced property.
But it appears we’re rapidly heading towards a point where this is no longer true, and wholesale real estate purchases may actually represent real opportunity. (Though patience will still be required.)
What do you think? Let us know in the comments area below… and as always, thank you for reading http://realestate.BryanEllis.com !
I think its time to scoop up deals or at least get them under contract and preadvertise to flip them without putting yourself in a corner. If its truely a deal buyers will come running, if not its a hard sale and just move on to the next while still continuing to market for buyers..that being said what do you think..? This is somewhat of a signal things are leveling off temporarily but will these hurting homeowners fall deep and market get worse when winter comes soon and heating oil prices are thru the roof again at the same time the foreclosures will continue to flood the market till next spring since sales are always slower in winter months, so take all this into consideration as prices should continue to fall as we get closer to winter and banks should be more motivated to sell quickly accepting larger discounts then now – Thx for you insight Bryan all of us who are hungry really need some meat and potatoes if ya know what im saying..
is it possible that this increase in sales is just a dead cat bounce because banks are withholding foreclosures and artificially restricting supply?
also, I sense big players are putting on credit pressure in attempts to ‘wait out’ bigger commercial deals so that they can pay pennies on the dollar for prime commercial real estate.
bryan
Here is a link to a Bloomberg article that has more information about the increase in home sales: http://www.bloomberg.com/apps/news?pid=20601087&sid=aiW2I1SdbB04 .
In summary: demand may be higher due, in part, to the $8,000 tax credit that ends this year, but home prices are down as much as 17% this May as compared to last May.
Still, i would like to see results on a regional, if not local, basis. Home price changes are a local event. Reporting on total U.S. price changes is not helpful on a ‘micro-economic’ level.
Cecil
With warmer weather having returned to the norther U.S. more construction and home sales normally take place. Thia was to be expected. The media is full of only half truths.