Housing Market Slipping Again? Not So Much

There was a lot of 'Chicken Little' chatter recently over the latest batch of figures showing the nation's housing market had "reversed course" and taken another tumble, or "double dip" in recessionary parlance.  A couple of points:  First, there is no national housing market.  All real estate, like all politics, is local.  Second, as Mark Twain so aptly observed, there are three kinds of falsehoods:  lies, damn lies and statistics.  Some market adjustment was predictable after last year's buyer and seller incentives from Uncle Sam.  Things could and would have been much worse without them.

Aggregating stats from vastly different markets around the country can occasionally help to illustrate very broad trends.  But drawing close parallels between 20 different cities (each of which contains dozens of micro-markets; much like a set of Russian nesting dolls) is truly comparing apples to oranges.  Both are fruit, but that's where the similarities end.

At the risk of sounding a bit Pollyanna, the housing picture in Minnetonka is much less severe than the news media would have you believe.  Both the number of "closed" sales and median sale prices are actually up from Feb. to April.  The supply of active listings is down since January and 'days on market' are up (about two weeks), but when you consider the cold, wet spring we've had, there's an obvious reason for both.  Average sale price is down, but less than one percent since last September.   

What we're seeing now is a lot more investors coming back into the market, picking-off a lot of the foreclosure inventory at fire-sale prices.  While no one enjoys seeing sellers lose their shirts, the positive in this is that distressed listings are coming off the market. They will be improved and held for the real estate boom that's sure to come.  Investor activity would suggest we're at or near the bottom in our market.  Do they know something you don't?

Trying to time the housing market is about as futile in real estate as it is in the stock market. So, if you're on the sidelines, by the time the media provide statistics telling you the housing market is back, you'll have missed the bottom anyway. And the money you thought you'd save will be eroded by higher mortgage interest rates on the horizon.  That's a prediction on which you can bet the farm.