I use a few different resources to track sales trends for houses. Zillow home sales rates and prices vary significantly depending on the location of the market. For 2013, Zillow is predicting only a 0.9% increase in Long Beach home sales and price appreciation. But, if you look at each zip code or neighborhood, that percentage will vary greatly.
Yes, the housing market will eventually recover and sales and prices will hopefully begin to increase. However, California’s real estate market remains, and will continue, on its flat road of recovery with occasional bumps (being a couple of months up, then a couple down, and so on). This means that every few months, sales volume will go up a little, then fall again, creating a zig-zag chart.
This pattern will continue for a few years, at least until 2016, and possibly beyond. Prices cannot move until sales volume is on a stable incline for nearly 12 months. Just like you, I want to say that prices are going to start recovering, but the data will not allow it.
Investors purchased 33% of homes sold at trustee’s sales in the first quarter of 2012 and bought for cash 28% of all resale homes. That is a huge percentage of homes! To have a sustainable market, end-buyers, people who will live in the homes they buy, MUST start buying a larger part of the volume.
If you read the news, it appears that housing is starting a recovery — except it’s not true. Current sales volume isn’t driven by a sufficient or sustainable demand in end-buyers. Why? California hasn’t reached anywhere near the level of employment growth or consumer confidence that is required to lure those much needed end-buyers out of the woodwork.
Everybody loves good news, but not at the sacrifice of the facts. If NAR’s thumbs are only capable of pointing one direction, let them celebrate:
California’s economy must gain strength. California needs job growth of about 400,000 annually for 24 months. AND more homes MUST be purchased by end-buyers. Then the data that we are on the road to recovery will look much more promising.