The cover page of the latest edition of Fortune magazine has emblazoned in large print The Return of Real Estate followed just below with Finally! After Years of Plummeting Home Prices, The Market Is Showing Signs of a Turnaround. But is the turnaround here? Sunday's 60 Minutes television show aired a segment about underwater homeowners and fraudclosure. What first got me thinking again about home prices was the most recent Commerce Department report noting that new home sales in February sank 16.9% to a seasonally adjusted record low of 250,000 homes. Sales were down 28% from February 2010 and prices fell 13.9% from January. This was a shockingly bad report. The National Association of Realtors has an ongoing Home Ownership Matters campaign involving a bus tour and Facebook page.
Here in New York its more mixed signals. New York State home sales in February decreased by 3.1 percent year over year but the statewide median sales prices continued to trend upward. Can prices continue to rise in a market generating fewer sales?
The story is similar in my town-- year to date sales are down while the median sales price is up. The inventory of homes for sale has risen slightly from last year's figures.
Not long ago I would increase the value of our home by .2% a month whenever figuring household net worth. This was a conservative approach-- until the real estate crash and then even I had to admit it no longer made sense. Now I keep the home value estimate static. Or as the realtor who sold our last home said to me: You and I won't determine the value of your house-- the market will do that. Truer words were never said.
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