Posts Tagged ‘real estate market’

Increases In Home Sales & Prices of Homes Explains An Influx of Realtors In Certain Regions

June 29, 2009

An article by Erik Pisor, published in today’s Inman News, discusses some recent statistics that seem to outline current real estate market conditions.

The article can be found at:

After reading the statistics and trends that Pisor outlined, I actually came to a different conclusion that he did.

While NAR reports a 10% decrease in membership, some local and regional associations are showing an influx of Realtors, which might be a result of a rebound in the real estate market, or at least the expectation of a rebound sometime soon.

The San Diego and  Sacramento markets show both an increase in homes sales as well as an increase in the number of Realtors joining their regional associations.

In California as a whole, sales are up 35.2% from May 2008, AND more people are taking the Realtor exams than last year. Maryland is showing a similar trend as well.

What does this mean for Phoenix, Tennessee, New York, Arizona, Texas, Washington D.C., & North Dakota – all of which show a similar influx of Realtors?

While Antuoun & Kleinhenz both claim that people commonly turn to Real Estate when they lose a job, it seems that the influx of Realtors into various regional associations is more likely due to the increase in the number of home sales.

This goes back to a simple economic model of a perfectly competitive market that has free entry and exit. When any given market that has free entry and exit becomes profitable, firms enter the market to get their share of the economic pie. When the market is not profitable, firms exit the market because they are losing money. After so many firms exit the market, the competition decreases for those who have stayed in the market, and those who have stayed become profitable again. Of course, that means that firms will start entering the market again because it is profitable for them. We see this ebb and flow in many different markets: the fast food market, the automotive industry, the computer software surge in Silicon Valley, and the door-to-door pest control and security salesmen.

Realtors are becoming profitable again in certain markets, and this is why there is a regional influx of members of local realtor associations. This is supported by the fact the Boston, MA has seen a continual drop in the number of Realtors, along with a continual drop in transactions.

Additionally, while Thompson, a Realtor in Boston, MA claims to have entered Real Estate when the market is down (see article), she is doing so with the expectation that it will rebound soon and that she can become profitable. Even if even if Realtors in other markets are still struggling to be profitable, it seems that those Realtors entering the market again at least have the expectation that doing so in their particular market will soon make them profitable.

While the median price of homes is still down 30.4% from May 2008, house prices have steadily been recovering for the past several months, and economists at NAR expect them to continue to rise. If the price of homes is starting to rebound,  and if the number of transactions is also on the rise (as shown in the cited article), it should not surprise us if more Realtors are entering the real estate market again.

It all goes back to a simple economic model of a perfectly competitive market with free entry and exit.

Is real estate starting to bounce back?

June 22, 2009

Is the housing market starting to recover? In talking to hundreds of real estate professionals in different markets across the country, I have found that some markets seem to be starting to recover.

What about your market? Are things getting better or worse?

The following article, published in The Wall Street Journal this past weekend, looks into some areas in California that seem to be starting to recover from this recession.

Please read, and more importantly, tell us what you think! How is your local real estate market doing?

California Housing Market Shows Pockets of Recovery

Prices Have Dropped Far Enough to Lure Buyers in a Trend Also Showing Up in Other Parts of the Country



SAN JOSE, Calif. — A home-sales revival that began last year in some of California’s cheaper inland areas has begun to spread to several more expensive coastal areas, another hint that devastated real-estate markets in the state — and other parts of the country — may see less grim days ahead.

Homes are selling briskly again in the lower end of the market in Santa Clara County, just south of San Francisco, with prospective buyers making multiple offers and bidding well above asking prices. The median sales price of a single-family home in May was $445,000 in the county, up 5.7% from February, when prices stopped dropping.

Santa Clara County is one of several areas around the U.S. where prices have dropped far enough to lure buyers, including investors, back into the market. Other metro areas showing this trend include the northern Virginia suburbs of Washington, parts of Phoenix and San Diego, said Ivy Zelman, chief executive of research firm Zelman & Associates. Even in glutted markets like southern Florida, investors are “gobbling up distressed inventory” in some areas, she added.

In Northern California, a big factor is first-time buyers like Denise and Steve Petrosky, who are newly optimistic about the market and can afford a home for the first time. The Petroskys in February paid $374,900 for a three-bedroom home in Morgan Hill, just south of San Jose, that last sold in 2006 for $610,000.

The couple were too leery to enter the market last year while prices were still heading down, said Mrs. Petrosky, 43 year old, an office manager, but felt prices had bottomed early this year. “Basically, we had set a budget what we could afford, which was below $400,000,” Mrs. Petrosky said. “When the prices came down below that, we bought, because we could afford to.”

Home prices are still falling in many California markets. But the state’s average existing single-family home price has been inching up for two months, with the median sales price climbing to $256,700 in April from $247,590 in February. Much of that increase is thanks to a growing number of pockets of recovery in the housing market.

In Northern California, the median price has risen for four straight months in Santa Clara and for three months in Contra Costa County, according to estimates by MDA Dataquick Information Services, a market-research firm in La Jolla, Calif. In Southern California, the median price has risen or stayed the same three months in a row in Los Angeles County.

Those price increases might not presage a lasting resurgence in California’s housing market. The state’s high unemployment rate — 11.5% in May — could lead to more foreclosed homes that banks could then dump on the market. California’s median home price remains down 37% from a year ago.

More broadly, Ms. Zelman and other housing economists cautioned against interpreting signs of greater sales activity as meaning the housing bust was nearly over. Interest rates on 30-year, fixed-rate prime mortgages have risen well above 5% in recent weeks and could rise further if inflation fears push up rates. A national tax credit for first-time home buyers ends Nov. 30, removing a big incentive.

“The overall economy in California hasn’t gotten its footing,” said Katherine Aguilar Perez, executive director of the Los Angeles office of the Urban Land Institute, an industry think tank. “So it’s difficult for me to say we have hit bottom.” Still, she said, “there are some pretty clear signals there is some leveling.”

A look at Santa Clara County shows some of the dynamics behind the leveling. Home to Silicon Valley in the north, the county of 1.8 million residents went into the slump with the rest of the state, with county unemployment shooting above 10% this year from 5% in 2007. The median price of a previously owned home fell 48% to $420,000 in January from a high of $805,000 in August 2007, according to Dataquick.

Late last year, the county’s sales still lagged behind those in inland areas like Riverside and San Bernardino counties, where sales volumes were up 251% in November 2008 over November 2007, according to the California Association of Realtors. Santa Clara County’s November sales were up only 16%. The inland sales were booming, in part, because prices fell further there.

Then the lights seemed to turn back on in Santa Clara County home sales. Sales were up 40% in December, and kept rising into 2009. The median price, which had slid steadily since June 2008, stopped falling in February. The number of pending sales in the county has nearly doubled to 3,882 as of last week from 2,096 a year ago, according to the Santa Clara County Association of Realtors.

The biggest catalyst, local agents say, has been affordability. By April, the number of Santa Clara county residents who could afford a home in the county, based on household income, had jumped to 50% from 18% two years ago, said Quincy Virgilio, president of the Santa Clara County Association of Realtors.

Typical buyers are Scott and Yuriko Herbig. Mr. Herbig, a 28-year-old engineer, said they had a budget of less than $400,000, and couldn’t find anything in that range when they began looking in 2008. Then, early this year, Mr. Herbig said, the market suddenly started filling with homes under $400,000. The couple in March bought a four-bedroom home in Gilroy for $362,000. “We got lucky,” Mr. Herbig said. “I think we hit right at the bottom.”

As in other areas of California, the hottest part of the Santa Clara market has been at the lower end — in this area, that’s under $600,000. For example, prices rose 15.6% to $540,000 in April in one zip code near downtown San Jose from $467,000 in January, according to Dataquick.

By contrast, prices in some higher-income neighborhoods in Santa Clara County are still falling — such as in parts of tonier towns like Cupertino and Los Gatos. Agents said that reflects borrowers’ problems getting jumbo mortgages to make those purchases. Home prices are still falling in parts of San Francisco and San Diego County for the same reason, they said.

—James R. Hagerty contributed to this article.

Write to Jim Carlton at

Printed in The Wall Street Journal, page A3

U.S. Real Estate Market

November 13, 2008

The U.S. real estate market is going through some turbulent times.  Most experts agree that the market will continue to worsen before it gets better. Alas, in the midst of all of this somebody has taken the time to put together a hilarious parody on the market.  I hope you will all find this as funny as I did.