Initial Numbers Show Used Home Sale Prices Rise a Robust 11%, But You Gotta Look Inside the Numbers. Meanwhile, Ours Is Still For Sale ..
Like the always say, the Devil is in the details.... Yes, you could look at just about any statistic, and pound it into a way that makes your point look right. Politicians do it all the time. Doing it with Real Estate numbers is pretty easy too. Take the sales numbers for sales of pre-existing homes (used houses for those of you in Allendale). Yesterday's stat that the median price of a used house went up 11% from 2011 must look like great news right? It's the end of the housing bubble. We all can start getting Home Equity Loans again (remember them?) and go on vacation! Uhh, not so fast...
The problem when you look at numbers from just a previous year, is it all depends on what it was like that year - and the problem was, the housing market was in a free fall in April, 2011. Remember those little things called foreclosures? We try to forget also. Well, when a house goes into foreclosure, it still goes on the market, in what is know as a 'short-sell' house, as in the owner is short on cash, and needs to sell it. The problem with a short sell house is that if the owners don't have enough money to pay the mortgage, they sure as hell aren't able to maintain them... So generally, these houses are in disrepair, and need lots of basic work. On average, they go at prices 1/3 lower than the same house not being foreclosed on.
So, what does this have to do with anything? Well, we are currently in a foreclosure moratorium. That is, banks have been blocked from foreclosing on anyone for months, until the Government settled with them on their Robo-Banking argument. So, there are less short-sell houses on the market today than last year... A lot less.
In 2011, about 36% of all used houses on the market were short-sells. Today, it is only 27%, and it's not because Americans are catching up financially - it's because they have been protected . For now. If we do the math, a 25% reduction in homes that sell 33% less on average means - that you pretty much have that 11% difference. So, in real terms, housing prices aren't going up - they're flat as a pancake. If they were rising, would we be getting 30 year mortgages at 3.75%?? Hell no.
So, once again, we are here to take some semblance of good news for you, and smash your dreams that America is on it's way back. Until Americans get back to work, the housing market will NEVER recover. It goes this way: Get Job, Pay Overdue Bills, Save a Couple Dollars, Pay Credit Cards, Buy Car, Save More Money, Buy House. Housing prices won't go up on their own. This was a fluke, and until they reopen foreclosures, which isn't far away, more flukes are sure to follow. Don't thank us for ruining your day - it's our pleasure!