Home Sale UP, Confidence UP…..Bottom anyone?

Bloomberg reported that home values in 20 U.S metropolitan areas probably decreased at a slower pace while consumer confidence climbed.  Could this be a sign that the recession is letting up as real estate inventory dissipates?  Of course this is a major part in dictating a bottom, but lets also not forget that we have an unemployment problem to fix that could take some time, however, the housing market signs are pointing upwards.

For the first time in 2.5 years, home sales are higher in the Northeast than they were the year before.  Although most of the sales came from distressed property transactions such as short sales or foreclosures, it is still in indicative sign that proves inventory is being bought, which is the only way we can climb out of this housing crisis.  This first rigorous step of home sales could signal the beginning of a long road to recovery, which is one of the causes of the recent Wall Street rally.

Median home sales are 15% less than what they were a year ago today, however a year ago was a month prior to the Bear Stearns collapse.  Although the Bear Stearns collapse wasn’t until September, doubts were arising and the fear that gripped the country was one of the reasons no real estate changed hands.  That said, it was only after the collapse did we see housing prices plummet quicker than previous months which brought us to the first quarter of the year when the government stepped in to stimulate consumer confidence.  Due to this, it took more than 6 months for some type of stability or more educated guesses as to where the housing crisis was going.  Today, with historically low prices, low interest rates, and the tax credit, more and more people are diving into buying New Jersey real estate.

I like to consider my glass half full, but although we are seeing positive signs, it does not mean that sales will continue to rise on a straight path or right upward curve.  We are likely to bump along the bottom for a while, and how long that is, nobody knows.  Let’s see how, if any, the commercial and credit card market sector affects residential transactions.

The fundamentals of unemployment continue to create a lull though.  As unemployment rose from 9.2% to 9.3% in July, the negative fundamentals still exist.  Unemployment is a leading indicator in today’s economic outlook.

Look for positive home sale numbers though.  This is going to need to sustain for a while since 1 out of almost every 8 homeowners are in default in New Jersey.  Don’t expect all of those people to go into foreclosure, but the default ratio will prove to be an anchor on our recovery for quite a while.  Again, expect sales to stay positive and distressed inventory to dissipate.

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