Comparing SoWal to the National Uptrend of Home Sales
February 3, 2011 by Murray Balkcom
Real estate is local. I don’t care what the market is doing in Alaska, and the people in Alaska don’t care about the Florida market.
Breaking it down further, the real estate market in South Walton has nothing to do with the market in Orlando.
Real estate is local. If you’ve been following my articles which include information on pending sales in South Walton, you shouldn’t be surprised with the latest national data on home sales showing pending sales on the rise. In this article, we will examine how the real estate market in South Walton compares to the regional market of the Southern USA and to the USA as a whole.
Earlier today, NAR (National Association of Realtors) announced that national pending home sales continued an uptrend in December 2010, “marking the fifth gain in the past six months.”
In South Walton, we’ve seen three consecutive month to month increases in pending sales. Here, August and September sales were terrific after coming off the slow months following the Deepwater Horizon scare. I think the fact that so many sales were on hold to see what would happen to the beaches pushed some of those sales into typically slower months. If it weren’t for that, South Walton would have likely closely resembled the national numbers for pending home sales.
Lawrence Yun, NAR chief economist, attributes the uptrend to “Modest gains in the labor market and the improving economy, creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions.” He also notes that mortgage rates should rise only modestly in the near future which will create a good environment for more home sales to creditworthy buyers.
According to the Pending Home Sales Index (PHSI), a forward looking indicator, the South dominated growth among the other regions of the USA, jumping 11.5% to an index of 101.9 for December, 1.7% above December 2009. The Midwest comes in second place with an 8% increase in pending home sales, having and index of 84.6. The Northeast had a small bump of 1.8%, but is still at an index of only 73.9. In the West, the index fell 13.2%, but still holding at a high rate of 105.8, likely due to substantially lower home prices in California and Nevada, which fell victim to mass foreclosures.
How did pending home (detached single family) sales in South Walton compare to the rest of the South? According to ECAR (Emerald Coast Association of Realtors), in December 2010, Realtors reported an increase in pending sales of 6.7% compared to the previous month. However, compared to Dec 2009, pending sales of homes skyrocketed more than 61%, which is much greater than the 1.7% increase for the remainder of the Southern region of the USA.
Notice that from October through December of 2010, pending sales rose each month, compared to 2009 where pending home sales decreased each month. Based on this, we should expect to see a better start in 2011 than we saw in 2010, which had a great start.