Positive Indicators in June: Market Strengthens Further

The real estate market in the Houston Area showed further evidence of visible strengthening in the June 2009 sales figures released by HAR. Numbers moved in lockstep with a three month trend of improvements that has median sales prices rising, total sales falling at a slower pace and sound inventory levels.

Data and Meaning

Median Sales Prices rose 2.8% to $164.500 compared to 2008 for the second month in a row. Remember, prices rose about half that in May, they were virtually unchanged in April and they had been falling prior to that. Further evidence of a positive upward trend.
Average Sales Prices dropped 2.4% to $221,783 compared to 2008. They had been pretty much flat in May. More than a decline in prices, this indicates a shift towards lower priced properties as the first time homebuyer tax credit program works its way and provides incentives to purchase homes before November 30th.
Total Property Sales dropped 15% to 6,306 compared to June of last year. While this is not positive in and of itself, the sales trend is pointing to lower and lower drops month after month. Sales had been dropping by 20+% each of the previous months of 2009 and June’s indicator points to a relative strengthening of sales.
Absoption Rate, an indicator of inventory, dropped by 4.2% to a healthy 6.4 months. Fortunately, the Houston Area has been blessed with positive inventory levels throughout the recession, which has strongly contributed to our area faring better than most.
The share of sales attributed to foreclosures continued to drop further and now they account for just 16.8% of total sales. At the beginning of this year, they accounted for 34% or double the current rate.

Graph Goodness

Where do we go from here?

I don’t know what the future holds neither do I claim to know. But we have data and I speak their language. Local real estate market has been trending toward rising sales prices while activity is picking up. Some of the questions circling in my head:

How much of this positive news should be attributed to government stimuli and most importantly, what happens when it stops?
What will happen to the overall economy in the next 3, 6, 9 months? Obviously, if we see improvement there, we might just get the lift we need to get off the ground.
How will increased foreclosure inventory affect the real estate market in Houston in the next 6 months? A combination of foreclosure moratoriums, understaffed banks and plain old incompetence, have caused a backup of bank owned inventory that is hitting the market as we speak.

Your thoughts?

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