Why Short-Term Trends In Housing Are Super-Important To Home Buyers

Posted on June 27, 2008Filed under Real Estate Sales Read the complete post or link to it
Consumer confidence is registering all-time lows and it's no surprise why. Americans are bombarded by bad economic news day after day.
Oil prices reach new highs
Stock prices reach new lows
Lenders are getting sued
The weight of the gloom drags down the economy and the press is quick to report on all of it.
When there's good news, though, the stories get brushed aside. And that's why a housing recovery is not getting the coverage it deserves.
On Wednesday, we looked at charts from April showing improvement in most major real estate markets. And we saw the same improvement looking back at March.
So now today, with the Existing Home Sales data showed improvement, we can infer that the trend of improving home prices continued through May 2008.
It reminds of Lou Brown's famous quote:
Now, we won a ball game yesterday. If we win one today, that's two in a row. We win one tomorrow, that's called a winning streak. It has happened before.
Calling this a housing winning streak may be premature, but there's a bevy of anecodal evidence that points to one.
For example, real estate agents in previously beat-down cities like Phoenix and San Diego are reporting an alarming rate of multiple-offer home sales.
I can back that up for Chicago and Cincinnati based on my clients' experiences. If a home is priced right, real estate professionals will tell you, buyers are swooping in.
Unfortunately, this sort of on-the-street reporting doesn't make its way to the papers because economists are most concerned with year-over-year growth. As in, how does this year compare to last year?
The press approach is well-suited for long-term trend analysis but home buyers rarely operate on long-term buying cycles. Generally, they're looking for a home for few months and then make their purchase.
This is short-term and is why month-over-month data may be more appropriate for the average homebuyer. As in, how do home prices this month compare to home prices last month?
Lately, all signs point to improvement and that means that homes will likely be more expensive to buy in July than they were here in June. The long-term charts won't make that conclusion for you but the short-term charts certainly can.