Existing Homes Sales Rise, but at a cost

Existing-home sales rose in January, marking three gains in the past four months, while inventories continued to improve, according to the National Association of Realtors®.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.3 percent to a seasonally adjusted annual rate of 4.57 million in January from a downwardly revised 4.38 million-unit pace in December and are 0.7 percent above a spike to 4.54 million in January 2011.

Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favorable market conditions. “The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents.”

To read the full story, go here: http://www.realtor.org/press_room/news_releases/2012/02/ehs_jan

What the story underplays however is that there was a cost to the rise in home sales and before you conclude I’m just a “Negative Nancy”, there may just be a silver lining to all of this.  The cost is clear as evidenced by these charts.  Home sales rose because prices have been dropping and as a result of lower prices, demand increased.  Economists call this “elasticity of demand” and it appears that the real estate market is highly elastic as small changes in prices caused huge changes in demand.  The National Association of Realtors reported that while prices are down in the “West” about 1.8%, home sales rose 8.8%

You’ve heard me often say that real estate is all local and you would be right to say “so what” to what’s happening on a national or even regional basis.  Keep reading below to see the charts on price and home sale volume for the South Bay.  

Meanwhile, thank you for reading your latest newsletter and when you come across someone looking to buy or sell real estate here in Palos Verdes or around the South Bay, take out your cell phone and text or call me!

At Your Service,

George Fotion
www.homeispalosverdes.com
310.36.6467
george.fotion@homeispalosverdes.com

Palos Verdes Estates Home Pending Sales Shows Uptrend

The National Association of Realtors published today their latest study on home sales and there has been a significant improvement.

“Existing-home sales continued on an uptrend in December, rising for three consecutive months and remaining above where they were a year ago, according to the National Association of REALTORS®.  The latest monthly data shows total existing-home sales rose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.”  You can read the entire article by going here.

But while national trends are interesting … what’s happening on the local level.  For example, let’s take a look at Palos Verdes Estates real estate.  Are pending sales (these are the Palos Verdes Estates homes that are entering escrow) increasing or decreasing?  What’s the general trend?  Obviously no matter what asset class we study, nothing goes straight line up or straight line down.  So take a careful look at the highs and lows.

Are there “higher highs” and “higher lows”?  What’s this tell you about what the market’s direction might be in the next few months?

You are welcome to request access to other charts I keep for the Palos Verdes real estate market and general South Bay real estate market by visiting this link. 

From Palos Verdes Real Estate Market Charts