Housing Reports Require a Second Look
Things are not always as they first appear
Just a day after reports that sales of Exsisting Homes had exceeded expectations and had improved some 30% over year ago sales, today’s news sucker punched the market when it was reported that sales of New Homes were off of forecasters expectations by some 20%.
The Story followed yesterdays market rally on news that exsisting home sales had surged surprising the “experts” who influence bets in the marketplace based on their insights and prognostications. The “experts” were surprised again today when new home sales numbers came up short.
It seems to me the news here is that the markets are so touchy and reactive to the reports in the first place.
Any thinking person knows that the overall market is currently skewed by artificial stimulation in the form of record low interest rates and tax breaks that are subject to change at any time. Many people thought the $8,000 tax credits for first time homebuyers might go away in November as scheduled and the uncertainty created a rush to buy in September & October. The tax breaks were then not only extended but expanded to move up buyers so forecasters needed to recalibrate once again.
One need only look at the drop in average and median prices of the sales that have occurred, even as unit volume has increased, to conclude a glut of undervalued bank owned and distressed properties probably explains the jump in existing home sales vs. new.
For new homes, it is difficult to compete in the marketplace with the values available to buyers willing to shop for bargains in resale.
It really is a great time to be a qualified buyer. Not so much a market forecaster. Do your homework, shop around and get some professional help because with all the variables and shifting sands, even the so called experts aren’t always quite sure of what they’re looking at when placing bets on the direction of the housing markets.
