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Housing Recovery Stranger than Expected

By Guest Author | February 25, 2012
  • On the back of Capital Economics’ observation that the U.S. housing market’s recovery is not quite as strong as previously thought and Freddie Mac’s positive market outlook, the escalating opinion of experts everywhere is that some odd things are happening in local metro markets. While pointing fingers could be directed at the more obvious reasons like a stuttering economy, there are a few other factors that are creeping up on the horizon, like refinancing woes and government endorsement. Still, the news is positive, even if it’s causing a bit of havoc with the rules of supply and demand.

    green house
    Confused about the housing recovery? So are we! © Dawn Hudson - Fotolia.com

    We recently published an article about the strange happenings in the California real estate market that seem to follow in line with what we‘re seeing on a national scale. California includes a diverse set of markets due to its size, but the prevailing presence of investors in the state with cash made the inventory levels drop significantly across the board.

    What about nationally? We took a look at three of the top ten metro areas in the nation:

     Statistics

    Chicago

    Dallas

    Miami

    2011 Inventory

    16097

    5219

    15511

    Today's Inventory

    11889

    3752

    6035

    % of Change

    ↓35%

    ↓39%

    ↓157%

    2011 Median List Price

    229,900

    $199,000

    $184,500

    Today's Median List Price

    $212,000

    $224,900

    $225,000

    % of Change

    ↓8%

    ↑12%

    ↑18%

    Chicago

    According to the Illinois Association of Realtors, a possible reason for the decrease in Chicago inventory could be attributed to several settlements between states and five major banks related to foreclosure abuses. The backlog of foreclosed inventory should be moving more freely now, resulting in a decrease in available inventory. The Association also asserts that “while sellers may not be getting all of the money they want for a house, they are getting traffic and interest at levels that haven’t been seen in several years”. This supports the decrease in the median list price, and high demand in buyers.

    Dallas

    Rental rates are rising in Dallas, which may drive residents to look toward homeownership rather than navigate the jungle of high-rises. Low mortgage rates will just perpetuate this in the coming months, but the median list price has risen 12% since last year.

    Miami

    High demand also plays a key role in the dwindling inventory in Miami. This doesn’t exactly mean that the market is a well-oiled machine though, as 49% of all closed residential sales in Miami were distressed. Strangely, the average foreclosure is reported to still take around 800 days to complete, but the same forces that influenced Chicago’s inventory—mainly legal settlements with bank establishments—are likely the galvanizing factor in the movement of backlogged foreclosures.

    Article written by Lauren Tyson of Movoto Real Estate, striving to make home-buying easy for everyone.

  • One comment on “Housing Recovery Stranger than Expected”

    1. Yes the national averages don't present a clear picture because housing markets are very much a phenomenon of local fundamentals. Some areas are doing better and some worse, largely because of what is happening locally.

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