Spring is finally here and most of my agents, myself included, are seeing signs of life in the Real Estate market.  The latest figures are confirming what we have been seeing, and a visit from NAR’s top economist last week gave us all a little hope that we are finally starting to work through the excess inventory that is bogging down the market.

Bucking the national trend in home sales, The Rhode Island Association of Realtors (RIAR) showed a 12.4 % increase in sales from March 2008 to March 2009, and existing home sales increased 21.5% from February 09 to March 09. National Association of Realtors data showed a nationwide 7.1% decrease in sales during the same twelve months.  RIAR statistics include Rhode Island sales only, while NAR data includes the Fall River and New Bedford metropolitan areas. NAR reported that distressed sales accounted for just over half the sales in March virtually the same as in Rhode Island.

Lawrence Yun, NAR’s Chief Economist was in Rhode Island last Wednesday speaking at a RIAR conference.  He feels the national housing market “has returned to its normal balance after a buying frenzy in the first part of this decade led to a collapse last year, that can set the stage for buyers to return to the market and house prices to stabilize.  A median-priced house is as affordable as it was in 1998, before the run-up in housing prices.” 

This Week’s Real Estate Insight:

 You can take it from me, or you can listen to these two economists, Yun believes conditions are right for recovery to begin in Providence. “The buyer should be coming back, Providence will be the first housing market in the Northeast to emerge from the housing slump, and  University of Rhode Island  economist Len Lardaro agreed with Yun, saying “Now would not be a bad time to buy real estate — at the right price.”I’d be thinking about buying a house.”

 

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The January Pending Home Sales Index fell 7.7 % from December, 6.4% below January ‘08,  the lowest level since 2001.  In the Northeast the index dropped 12.7 % in January, 19.7 percent below a year ago. Lawrence Yun, NAR chief economist, said “We expect soft home sales in the near term, but buyers are expected to respond to improved affordability conditions and from the $8,000 first-time buyer tax credit.” In December, the pending home sales index rose 4.8%, compared with a prior estimate of a 6.3% gain. The index is based on signed sales contracts, which usually occur a month or two before the sale is closed, when sales are reported in the NAR’s existing-home sales report.

Ironically, sales are down as affordability is increasing. NAR’s  Housing Affordability Index rose 13.6 % in January, a new record high. The HAI shows that the relationship between home prices, mortgage interest rates and income is the most favorable since 1970. The index shows a family earning $59,800 could afford a home costing $283,400 in January with 20% down, assuming 25% of income is devoted to mortgage principal and interest.  A year ago, the typical family could afford a home costing $263,300.

 

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