Market ripe for sellers according to weekly recap data from housing market recovery index
A new weekly measure of housing market health from the National Association of Realtors’ consumer website compares current traffic, price, new listing, and time on market trends to where they were in January, before the coronavirus’ impact.
According to the most recent results, the index improved 1 point last week and is now at 88.8, 11.2 points below the baseline of 100.
The index shows home prices are continuing to increase while time on market is beginning to fall.
In short, home buyers are returning faster than sellers and it’s causing homes for sale to sell faster and at higher prices.
Danielle Hale, chief economist for the site, says homeowners who think this isn’t a good time to sell may be mistaken. “The general sentiment from consumer surveys is that now is not a good time to sell a home because of COVID, economic uncertainty, and social unrest, but the data is saying the opposite,” Hale said. “Home prices are back to their pre-COVID pace and we’re seeing listings spend slightly less time on the market than last week.”
Despite conditions, though, the number of active listings is now 25 percent below one year ago at the same time.
Year over year housing market recovery index for Las Vegas and Los Angeles
|Metro||New Listing||Median DOM||Median Listing Price||Online Searches||Overall Index|
My thoughts on current housing market recovery index
This is all good news to existing homeowners and overall housing market.
However, as I’ve said on previous post: Home Prices Increase 5.4% in April, we really need to wait few months to see the true market trend.
One thing I know for a fact is that quality of residential mortgages loans written after 2008 crash has gone up tremendously since then. So I’m not too worried about the residential market in itself. What I’m worried about is the commercial real estate market crashing and trickling down to rest of us.
You see, as a primary residence (or even 2nd home) homeowner, you are responsible for the mortgage payments. The lenders made sure that your income alone qualifies to cover these payments on top of your other expenses.
When it comes to commercial lending, it’s a total different ball game. There are certain aspects where property owners cannot control. For example, if the tenants go out of business all of sudden and breaks the lease prematurely or vacant space not being leased.
What’s even worse is that commercial mortgage payments are much higher than residential mortgage payments. Without rental incomes form tenants, how long do you think the owners can front the mortgage payments, property maintenance, and staff?
As you can imagine, when commercial mortgage defaults, banks take on a much bigger loss compared to residentials and will have detrimental effects on their balance sheets that much quicker.
Again, in the months coming ahead, we will likely hear more of these troubles in the nation. I just hope that it doesn’t trickle down to residential side of things.
Residential market seems peachy enough but what about commercial real estate owners? What are your thoughts on the market stress commercial real estate is facing?
Searching for homes?
Let us connect you to top real estate agents in town.
Work with knowledgeable professional agents, not a pushy salesperson!