ocrealestate

       Are We There Yet?   by Steven & Mikey Hall

The $64 question is - “Has the real estate market finally reached bottom?”

Since all real estate is local, there can be as many answers to this question are there are neighborhoods. Here in Orange County, conditions in Rancho Santa Margarita don’t necessarily determine conditions in Mission Viejo or Aliso Viejo or Laguna Niguel. In fact, each of these communities has its own distinct personality. National numbers are quite likely problematic when it comes to predicting what’s going to happen in your housing tract.

The Index For The Pending Sales of Existing Homes

Now, having said there can’t be a discussion of the real estate market in general you should know that the National Association of Realtors (NAR) has created a neat little index for the pending sales of existing (as opposed to new construction) homes. The index is based on the average number of homes sales in 2001. For reference, an average number of home sales equaling that experienced in 2001 would score an index value of 100.

So what does the index tell us?

The April index for the West, the Midwest and South went up from March. The index for the Northeast went down.

In the West, the score is 98.8 or about 8.3% higher than the previous month and 4% higher than the previous year. In the Midwest the index moved up 13% over March to stand at 83.7. The South went up 4.6% to 88.8 and the Northeast went down 1.9% to 79.3. The national trends are therefore toward an increasing volume of sales.

What’s It All Mean?

If we look at pending sales as the market or sales volume, the index tells us that while sales volume is increasing it is still below the 2001 averages. Frankly, in my opinion it would be a mistake to use this index as an indicator of the direction of market price. For example, one can imagine a market in which prices are cascading downward on large volume. An up market can also occur on very slight volume (short supply). I think we can comfortably say this latter situation would be reasonably rare.Still, rising volume is generally seen as a positive indicator and the NAR’s index is generally positive news.

As a side note the total number of sales (all prices and all types) in Aliso Viejo, California for January through May of 2008 has steadily increased. This means the local Aliso Viejo sales volume is moving in the same direction as the NAR’s index for the West.

mailto: AskMikeyHall@gmail.com  

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