Pending Home Sales Rise
According to the National Association of Realtors (NAR), the Pending Home Sales Index rose to 79.4 in July, up from 75.5 in June. Now, those numbers don't really mean anything unless you put them in context. The Pending Home Sales index is a leading indicator for the housing sector. This number is based on a sample of about 20 percent of national pending home sale transactions. Historically, the number of pending home sale transactions has been a very close indicator of actual closed transactions, so the pending home sales index gives you a sneak peak of closed transactions within six to eight weeks. Where does the number come from? Well, just like most other indexes, they are based on an arbitrary starting point. Our starting point happened to be in 2001, when the number was created. An index of 100 was arbitrarily assigned to the average pending home sales during 2001, which also happened to be the first of five years of record existing home sales. For example, if the index is below 100, we are experiencing a slower market as compared to 2001. If we are above 100 we are experiencing an accelerated marked as compared to 2001. So to sum up, our current national pending home sales index is at 79.4 for July 2010, which is about 19.1% lower than July 2009. Remember, these numbers are national numbers...Lets take a look at how things are regionally.
Fort Collins Detached Home Statistics (July 2007-July 2010)
Above you'll find some sales information for the Fort Collins area. In the hustle and bustle of 2007, when everyone was just cruising along, enjoying caviar and champagne, life was good. 364 homes sold for a median of $240,000 in just under 3 months. Then, things changed. The stock market took a dive, unemployment fears escalated, and a recession began to rage on. What changed in the housing market in 2008? Well, to me, not much. You could still sell your home for about the same price as it sold for the year before, you'd just have to wait an extra week or two to get it sold. Not the end of the world right? Lets look at 2009. About the same number of homes sold in July of 2009 as they did in 2010, which is good. What's bad is the median price of those homes took a small dive. In 2009 we were in the height of the recession, the stock market had bottomed out in early March and things were looking gloomy.
Fast forward to the present. What is the difference between July 2010, when things are apparently bad, and July 2007 when the recession was just a twinkle in Ben Bernake's eye? Number of solds are down about 45% and you'll have to wait 19 extra days to sell your house. Did you notice what didn't change? The median price of homes was only down $1000. If you can get nearly the same price for your home as you did in 2007, what is causing the drop in home sales? I've said it before and I'll say it again, fear is the reason people aren't selling their homes. They are fearful that they will lose their jobs, fearful that they won't be able to sell their homes and they owe too much on their mortgage to sell their homes; they are just fearful folks in general. To me, its understandable, but not founded. Overcoming fear will be the best way to overcome this recession and get the economy back on track. I'm not saying our housing market is accelerating, but I can say that the numbers indicate that it is steady. So what are you waiting for?
(By the way, 30 year fixed rates are at 4.32%, and 15 year fixed rates are at 3.83%)