The housing market appears to be perking up, with sales of existing homes hitting the highest levels in two years, according to a Nov. 23 report by the National Association of Realtors.
The news should cheer both sellers and buyers. Sellers are obviously glad to see more buyers, and buyers should worry a bit less that a home bought now could fall in value.
But nothing’s guaranteed, and the housing market, despite low mortgage rates, could be undermined by rising unemployment, foreclosures and tougher lending standards. Nearly a quarter of U.S. homes are worth less than their owners owe on the mortgage, according to real-estate information company First American CoreLogic, and some experts think the market will not really turn around until 2011.
For any individual home, it’s the local market that counts, not the national or statewide statistics. So, how can a buyer or seller gauge a neighborhood’s health?
Local real estate agents are an obvious information source, though they have an incentive to talk up a market’s good points because they are paid by commission. Still, an agent can provide revealing statistics. You don’t necessarily need a broker from a big firm like Prudential (Stock Quote: PRU) or Re/Max, just someone who has worked in the market for a number of years.Ask how many homes are for sale in the local market, and how does that compare with previous years? The basic laws of supply and demand say that prices will be held down if there are more sellers than buyers.
A related statistic shows how long it would take to sell all the homes on the market at the current pace. The shorter the time period, the better since it shows sales are moving at a good clip. A period of more than six months is worrisome.