Redfin Real Estate sent a their April 2012 Roundup about current conditions in the housing market. You can read the entire roundup online here. Below is a portion of their analysis of trends in the housing market, which suggests the bottom has been reached.
Is the Inflection Point Here?
- Sales momentum stalled: Pending sales slipped .5% from January to February, when analysts expected a 1.0% increase. Compared to February 2011, sales increased 9.2%. More recently, last week’s home-purchase index increased 3.3% from the week prior, even as re-financings fell due to rising interest rates.
- The big builders are bullish: Toll Brothers reported its best spring in five years. Lennar sales increased 33%, and Hovanian sales increased 30%. But KB’s orders fell 8%.
- Shadow inventory falling: even as properties spend more time in the foreclosure pipeline, the number in the pipe declined because of fewer defaults at the beginning of the process and more sales at the end. Investors are gobbling up foreclosures by the thousands. Seriously delinquent mortgages dropped from 4.4% in February 2011 to 3.8% in February 2012. The historical norm is 1%, so we’re not out of the woods yet.
- Three new bottom calls: JPMorgan Chase’s CEO said “I believe we’re very close to the inflection point. People look at prices that are still coming down but all the other signs are flashing green.” A projection based on opinions from 38 economists predicted new-house-construction projects will nearly double from 2011 to 2014. Bank of America/Merrill Lynch revised its projection for 2012 home prices from a 3.5% drop to a .5% gain.