Stability in housing markets in 2010, says survey
Predictions of a second collapse of the housing market are exaggerated, according to the October 2009 RPX Monthly Housing Market Report released by Radar Logic Incorporated. Radar Logic argues that housing demand is currently strong, with home sales outperforming historical trends for this time of year, and low home prices will keep demand strong in 2010. Government incentives will continue to support demand well into next year. After unemployment peaks, perhaps in the second or third quarter, increased stability in household incomes will provide further support to housing demand.
Radar Logic suggests that the looming inventory of distressed properties will enter the housing market at a controlled rate that could be absorbed by existing demand without drastically reducing prices. Thanks to bailout money and a general improvement in their financial health, banks have been relieved of the urgent need to liquidate their assets. As a result, lenders and government entities like Fannie Mae are able to curtail sales to stabilize prices and avoid recording losses on properties.
· The 25-MSA RPX Composite price declined only 0.7% during the month ending October 15, the smallest decline for that time period since 2005.
· Prices increased month-over-month in 11 of the 25 metropolitan statistical areas (MSAs) tracked by Radar Logic, mostly in the West Coast and Southeast regions where seasonal factors are less salient that in other regions.
· One-, three- and six-month trends in home sales across the 25 MSAs were stronger in October 2009 than they have been in any other October since the beginning of Radar Logic’s data in 2000. The 25-MSA RPX transaction count usually falls in August, September and October. This year, the 25-MSA-transaction count has increased or remained constant every month since January.
· RPX transaction counts increased over the month ending October 15 in 22 of the 25 MSAs. As these transactions precede the extension of the homebuyer tax credit by Congress in early November, the uptick in transaction counts may be due in part to a rush of sales in advance of the tax credit’s original November 30 deadline.