Back to 2006?
There are two iconic sayings in real estate, “Two weeks is a lifetime,” and “All real estate is local.” Two very important things to remember when analyzing real estate sales statistics. That’s why you need to remember this as you read the following.
The S & P CoreLogic Case-Shiller U.S. National Home Price index is compiled on a regular basis primarily by Robert Shiller an economist at Yale University. This index is considered a benchmark in the housing market, and the most recent analysis released at the end of November had to do with the housing recovery since 2006.
According to this report, the home prices across the United States have climbed back above the record reached more than a decade ago in July of 2006. The average home price is now at 0.1 percent above the July 2006 peak, however, when adjusted for inflation the index is about 16 percent below the 2006 high. In 2012 we were still struggling with a recovery and prices were 27 percent below the July 2006 peak. That said, home prices jumped 5.5 percent during the past year, and it looks like the country is on its way to a solid recovery.
Getting back to the all real estate is local caveat, I decided to pull up the July 2006 sales statistics for Manatee County from the Realtor Association of Sarasota and Manatee website, and compared them to the July 2016 sales numbers.
Here we go:
• July 2006, single-family homes: number of sales 351, average sales price $461,533, median sales price $350,000.
• July 2016, single-family homes: number of sales 578, average sales price $355,374, median sales price $279,250.
• July 2006, condos: number of sales 141, average sales price $625,980, median sales price $269,990.
• July 2016, condos: number of sales 214, average sales price $230,839, median sales price $185,250.
Per the Manatee County sales statistics, although the number of sales is considerably higher, the average and median sale prices are not up to the July 2006 level. It’s true that Florida statewide took a much harder hit when the housing bubble burst compared to other parts of the country so it’s understandable that our recovery price wise is taking longer. That’s why painting with a broad brush can be dangerous since local trends generally outflank national ones.
There’s no doubt that the real estate market is a lot healthier than it had been. Now only 12 percent of homeowners who have a mortgage owe more than their home is worth compared to 30 percent at the bottom of the market as reported by Zillow. However, the homeownership rate is near a five-decade low, and although the mortgage market has loosened up, it could still be difficult for buyers without perfect credit to qualify. Also, the prices of homes continue to go up partly because of low inventory, far outpacing income. With higher mortgage interest rates on the verge of going up, this growth picture could change quickly, which is why the saying, “Two weeks is a lifetime in real estate,” is so pertinent.
Statistics are always a snapshot in time, especially when it comes to sales. It’s always hard to predict what individuals will do. If you keep it local and keep it current, you have a better chance of reading and understanding the market.