Real Estate and the Weather

Being a Realtor, it is not unusual to have people – family, friends, people at parties, perfect strangers – ask you about the real estate market. In fact, it’s almost as common to talk about real estate as it is to talk about the weather. Interestingly enough, the weather in the Bay Area over the past couple of weeks in January has been almost as unpredictable and as unusual as the real estate market of the past couple of years!

In reviewing some articles recently about the real estate market, I have come to the conclusion that we are definitely not out of the ‘unpredictable and unusual’ market yet. For example, in a recent article written by the California Association of Realtors (C.A.R.) it was reported that home sales rose in December, posting their highest level since May of 2010. “December’s sales increase reflects buyers taking advantage of rock bottom interest rates and improved affordability since the first half of the year, when prices were higher,” said C.A.R. President Beth L. Peerce. “Rates hit their absolute lowest in October but began edging higher in November, prompting buyers to get off the fence,” she said. Additionally, the article goes on to say that “following three consecutive monthly declines, the median price of an existing, single-family detached home sold in California increased 1.7 percent from November. The unsold inventory index for existing, single-family detached homes was 5 months in December, down from 6.2 months in November but up from 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.”

In another real estate-related article – this one in the Wall Street Journal this past week, the emphasis was on the strength of the luxury market in the Bay Area. “Across the nine-county region, sales of homes priced at $2 million or more soared in 2010 over 2009, according to a preliminary analysis by DataQuick Information Systems.” And, the article goes on to say, “the numbers might be even higher than indicated. DataQuick, which culls its data from public records, said its numbers don’t include the last week of 2010 and might not show all transactions priced above $2 million because some super high-end deals don’t show up in the public record for long periods”.

Growing increasingly positive as I reflected on this ‘better than expected’ news, I was soon forced back to reality as I read through CNN Money’s January 20th article entitled “Shadow Inventory Threatens Housing Recovery”. I’ve heard a lot of people talking about ‘shadow inventory’ lately – those listings that are in some stage of default or foreclosure that the banks have not yet released to the market – and whether or not this inventory actually exists. “There is a growing glut of foreclosed homes threatening to hit the market over the next couple of years, potentially delaying any recovery”, wrote CNN Money Staff writer, Les Christie. “There were 1.7 million homes either owned by the bank or in some stage of foreclosure at the end of the third quarter of 2010, according to a recent report by Standard & Poor’s.” Yes, these are national statistics – and as we’ve commented before it is hard to generalize as markets tend to be very local in nature. However, the article goes on to say, that “last year there were nearly 2.9 million homes that received some kind of foreclosure notice”.   Unfortunately, most of know of family, friends or neighbors who were among those statistics.

So, at the end of the day, as with most news and information we are inundated with these days, I think it’s best to try and keep all of this in perspective. And, just think…we don’t live in Minneapolis, where the monthly supply of ‘shadow inventory’ figures rose 61% between Dec. 31, 2009 and Sept. 30, 2010, to 35 months…not to mention that the average temperature in January there is 22 degrees!!

Share this post:

Sign Up for Daily Blog Updates

Receive daily blog posts from Pacific Union in your inbox.

Sign up for Monthly Market Updates

Receive monthly real estate news from Pacific Union in your inbox.