Area housing stats showed a slight uptick in April with sales up 3.3 percent from 211 properties sold in March to 218 properties last month. And the three-month rolling price rose slightly from $103,856 in March to $104,015 in April.
However, compared to a year ago, sales are down considerably. A total of 762 homes were sold the first four months of 2011, down 28.8 percent from 1,070 homes sold during the same period for 2010 (sales were at elevated levels from March through June of 2010 in response to the federal homebuyer tax credit). Significant “shadow” inventory (foreclosures and short sales) also continues to drive average prices down, making up 30 to 40 percent of typical local monthly volume.
“We are now bouncing near the bottom of the housing market,” said Steve Bois, CEO of Rockford Area Realtors. “Most national experts are predicting the recovery to begin this year. Some economists are forecasting that we’ll start seeing a rise in third quarter.”
Meanwhile, pricing indexes show major incentives for home buying. The National Association of Realtors’ newly-released Housing Affordability Index shows the typical monthly mortgage principal and interest payment of a median-priced existing home is only 13 percent of gross household income, the lowest since records began in 1970, meaning homes are now more affordable to middle- and lower-income households.
Likewise, interest rates are still historically low. According to Freddie Mac, the national average rate for a 30-year conventional, fixed-rate mortgage was 4.84 percent in March and April, down from 4.95 percent in February and down from 5.10 in April 2010.
Realtors are likewise optimistic.
“Realtors are telling us they’re seeing all kinds of fresh faces in the marketplace,” Bois said. “New investors are buying properties, indicating that price points are attractive. Housing price declines are also drawing in middle- and lower-income families who previously couldn’t afford to buy a home.”
Bois has also heard anecdotal reports of different cases of multiple buyers competing to buy the same property, citing these “bidding wars” as unheard of ever since the housing recession began in 2008.
Local statistics are backing up this newly found optimism. Realtors recorded 3,188 confirmed showings in April this year, the second-highest monthly showings in the last year. Rockford sales pending were up 16.3 percent in April over March and at their highest level since May 2010.
Nationally, the Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from 89.5 in February, according to the National Association of Realtors (an average index of 100 recorded in 2001 represents a historically high level of home sales activity).
“One of the biggest misconceptions in today’s housing market is that houses are not selling,” said Bois. “We know this is not the case. Seven houses sold in Rockford yesterday, more than 14,000 across the country. Based on the current uptrend with very favorable affordability conditions and ongoing job creation, existing home sales will only continue to rise.”
From the May 11-17, 2011 issue