economy

Yesterday the New York Times ran an article that talked about how we may be seeing signs of a housing recovery in Sacramento County,which was hit hard and early by the housing crisis.

Sales are up 45% from a year ago, and other areas such as Las Vegas and parts of Florida are also showing significant increases.

Notably, prices have not increased, but are showing signs of stabilizing.  According to an analyst quoted in the article, “…this is how things might look six months before prices bottom out.”

The article points out that sales tend to recover before prices, and that sales nationwide were down 7% year-to-year in March.

What’s happening locally?

First-time home buyers are driving the market in the Seattle area right now (as well as in CA, as noted in the article).  With the surge in activity that I’ve seen personally and hear about from other agents, I expect April and May to show very strong numbers compared to earlier in the year.

Last year we had some odd perks in the spring and then a dismally slow summer.  This year the activity seems more consistent, but I wouldn’t be surprised if we again saw some slowdown during the summer months.  However, there are so many extreme factors in play right now (extremely low interest rates, the first-time home buyer credit, projections of upcoming job cuts, and the Microsoft layoffs of yesterday) that it’s hard to predict anything with a high degree of certainty.  Not trying to hedge, but I have no desire to pull a Jim Cramer….

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There’s been some interesting news on the economic front recently:

The Good:

Today the stock market recouped its losses for 2009 and actually turned positive for the year, apparently primarily due to early reports that stress tests of major banks may offer more detail and less bad news than originally expected.

This sent the S.&P.500 up 3.4% today, or .44% for the year.  The Nasdaq rose 2.5% today, and is up 11.8% for the year.

Going by what I read and what I see locally, I expect April to be a big month for homes going off market, and May should be a strong one for closings.  Every real estate agent I talk to is far busier than they were six weeks ago, as am I.

The Middling:

I spoke to an agent yesterday who said that Warren Buffet had been on TV a day or so before and said we were at the bottom of the housing market.  When I actually checked the article it turns out he thinks that we’re moving through housing inventory faster than we’re producing it, and that therefore we are on our way to prices leveling off (but not there yet).

He points out that about 1.3 million households are created each year in the U.S., and new housing starts had been running at 2 million a year.  Now there are about 500,000 new housing starts per year, so we should be absorbing excess inventory at the rate of 700,000 to 800,000 units per year.

The Not so Hot

The New York Times ran an article today about how there are growing concerns about the U.S. public debt, which is projected to rise from 41% of Gross Domestic Product in 2008 to 54% in 2011.

The concern is that government borrowing my edge out private investment and cause interest rates to rise, and also that the interest obligations may become unsustainable.  In addition, China (which has lent huge sums to the U.S.) is beginning to show concern about the U.S.’s financial health.  I’m tempted to mention that since they started the whole bird flu thing they should maybe give us a break in the health department, but something tells me that wouldn’t go too far.

Bottom Line

As I mentioned before, I don’t necessarily think we’re at the bottom of the market, and neither do the buyers I’m working with – but with these interest rates and huge price drops it’s an incredibly friendly buying environment for people looking for a home they mean to stay in for a while.

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