Analysts are announcing that the housing market hasn’t merely recovered. It’s actually healthy.
Ah, how times have changed. Only three years ago, we were mired in the low point of the housing crash. And now we’re talking about health. It’s tough to believe the market has come so far in a short 36 months.
Let’s revisit that time, shall we?
July 2010: Bring Out the Paddles
“Americans’ long infatuation with owning a home, which even the economic collapse of 2008 could not kill, shuddered and stalled last month,” wrote New York Times reporter David Streitfeld in an August 24, 2010 article.
Folks were panicking in July 2010. The sales pace of 3.45 million units would serve as the slowest existing-home sales rate after the housing crash, and reflected a 27.2 percent drop from the previous month.
Unsold inventory soared to a 12.5-month supply, the highest level since 1999. Homeowners were expressing more pessimism about home values than at any point during the past three quarters, and the median existing-home price languished at $182,600.
- Existing-home sales: 3.45 million-unit pace in July 2010 (NAR)
- National average commitment rate: 4.56 percent for a 30-year, conventional, fixed-rate mortgage (Freddie Mac)
- Total housing inventory: 12.5 month supply at the current sales pace (NAR)
- National median existing-home price for all housing types: $182,600 (NAR)
- Foreclosures: Lenders foreclosed on 92,858 properties in July 2010, according to RealtyTrac (second highest monthly total since April 2005)
Would the housing market ever take another breath? Fast forward two years.
July 2012: Resting Comfortably
“…All of the home price measures now are showing positive movement and that is building confidence in the market,” said NAR Chief Economist Lawrence Yun in a July 2012 press release.
Conditions would improve dramatically over the next two years. Year-over-year median prices rose for the fifth consecutive month, and settled at $187,300. Rates hit a then-record low of 3.55 percent, and sales quickened to a 4.6-million unit pace.
- Existing-home sales: 4.6 million-unit pace in July 2012 (NAR)
- National average commitment rate: 3.55 percent for a 30-year, conventional, fixed-rate mortgage (Freddie Mac)
- Total housing inventory: 6.3 month supply at the current sales pace (NAR)
- National median existing-home price for all housing types: $187,300 (NAR)
- Median time on market for all homes: 69 days (NAR)
July 2013: Happy and Healthy
Only a short three years ago, the housing market was strapped to a gurney with a nitro drip. But following a treatment of housing tax credits, low interest rates and greater economic stability, the real estate market pulled through.
Consider this: Homes are selling at a “healthy” pace for the first time since 2009. Figures from the National Association of Realtors (NAR) reflect a seasonally adjusted existing-home annual sales pace of 5.39 million, which falls between the “healthy” guideline of 5 to 5.5 million. July’s pace is a marked improvement (17 percent) from this time last year, when homes were selling at a 4.6 million-unit rate.
Prices are also on a steady climb. The national median existing-home price for all housing types was $213,500 in July 2013, which is 13.7 percent above the July 2012 price.
- Existing-home sales: seasonally adjusted annual rate of 5.39 million (NAR)
- National average commitment rate: 4.37 percent for a 30-year, conventional, fixed-rate mortgage (Freddie Mac)
- Total housing inventory: 5.1 months at the current sales pace (NAR)
- National median existing-home price for all housing types: $213,500 (NAR)
- Median time on market for all homes: 42 days (NAR)
Although most vital signs are stable, there’s one worrying symptom to report: First-time homebuyers are still shying away from the market. Housing analysts define a 40 percent first-time homebuyer share of purchases as “healthy.” But in July 2013, first-time homebuyers only made up 29 percent of all purchases.
Is the housing market the picture of health? No. Will the U.S. ever suffer a housing market collapse again? Probably. But with a clearer understanding of the warning signs and successful treatments, perhaps the effects of another slowdown will be less devastating, and the recovery more efficient.
Here’s to your health, housing market!