Tuesday, November 5, 2013

Real Estate Recovery May Happen Soon!

The information in this article is merely an opinion. It uses U.S. Census Bureau data on New Home Sales (not existing homes or non single family homes) to derive a proprietary thesis. No statement within this article should be viewed as a suggestion or statement to buy or sell real estate for investment purposes or any other purpose! The data was garnered from sources believed to be accurate but is not guaranteed.

Data from the U.S. Census Bureau may indicate that a bottom could occur in the real estate market as it relates to single family new homes as early as the first quarter of 2008. Though rather dismal data could be released in its first quarter report in April of 2008, the myriad of doomsayers that are bound to emerge may be the preamble to a stark recovery. By July of 2008 data may clearly show that the first quarter was indeed the bottom and that the real estate market is off to a healthy and speedy recovery after making its bottom!

And wouldn't that be nice? Most real estate agents will tell you that the slump has gone on long enough!

Near the end of November the National Association of Realtor's will release its third quarter report for 2007, which will show prices and sales in major metropolitan areas of new single family homes. The government, notoriously slow as always, will probably take a bit longer. But here is there data that they do have right now:

We can see from the real estate data and the associated graph that sales are down considerably on a year over year basis. We should also note that the 2Q2007 figure of 243 is preliminary, which is why it is italicized. You can view the actual real estate data here.

We utilized a proprietary Data Choices (www.DataChoices.com) algorithm to analyze this data. We are ignoring existing home sales for this report. The first item we noted was that third quarter and fourth quarter data appears skewed - which led us to believe predictions in this short time frame would be difficult. Nevertheless we continued to extrapolate data and our initial results seems to indicate a bottom in February of 2008.

As with all predictions they are subject to being grossly wrong and are only opinions. Nevertheless, just as with our Strong Dollar Project, we will continue to monitor and update the situation. If we are right about the bottom we will certainly indicate that in future reports. And if we are wrong then the whole world will know! Analyzing real estate data is much like analyzing any form of demographic data - data which can be vital to your career! And at Data Choices we love to analyze data and give you choices!
As always we stand on integrity and hard work.

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10/25/2007 Update:

U.S. Census released preliminary figures (with high margin for error) that indicate that new single family home sales increased almost five percent from last month but are still a whopping twenty three percent below last years year to date figures! The median sales price was $238,000 and the average sales price was $288,000. (A lot of people are confused by median versus average. We are working on a Data Choices Quality Index that will help explain this)

The October sales report will be released on November 29th.

We believe the most important information released in the current report is that the largest number of houses selling are in the $200,000 - $300,000 range by far! Preliminary figures for September show that thirty four percent of new homes sold were in this price range. The second highest grouping by price appears to be statistically tied in different categories: Homes below $200,000 in price and homes in the $300,000 - $400,000 range. These other groups sold at about half the number of those in the top group.

This may indicate that listing houses in the $250,000 range may have the best chance of selling currently, though there is certainly no guarantee that the trend for this price range will continue. Nevertheless targeting buyers who can afford this type of house and sellers who are selling this type of house may be a better option for the real estate agent than throwing darts at a board. Still, it is worth mentioning that these preliminary housing numbers represent an inventory of more than eight months at the current sales pace. Our overall opinion remains unchanged at this point.

See the Blog for recent news on Countrywide and how mortgage defaults affected them!

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