While several indexes and reports point to a struggling housing industry, a true reflection of real estate can only be seen by assessing local markets. Our comprehensive market analysis system, Local Housing Data, shows strong movement in the 2nd quarter for key housing indicators. The quarter was marked by a considerable increase in average sales prices across much of the northeast.
Several markets seemed to bounce back from a 1st quarter lull, arguably a symptom of extreme weather conditions. Average and median sales prices were up by as much as 16% in parts of the northeast compared to this time last year, though unit sales were down. This price appreciation is a positive sign, particularly since the home-buyer tax credit, a market buffer during this time last year, is absent. Mortgage rates continue to stay at historic lows, dropping to 4.51% versus 4.57% same time last year. This also counters 1st quarter activity, when mortgage rates were creeping upwards.
A combination of low housing prices and historically low interest rates make this an opportune time to purchase a home. Despite this, there are several factors hindering an overall sustained growth in the industry. A high rate of unemployment is perhaps the largest impediment. Last month’s disappointing jobs report raised questions about the length of a full economic recovery. However, Federal Reserve Chairman, Ben Bernanke, seems to believe that a weak economic performance was due to temporary circumstances: “In part, the recent weaker-than-expected economic performance appears to have been the result of several factors that are likely to be temporary. Notably, the run-up in prices of energy, especially gasoline, and food has reduced consumer purchasing power.”
Access to credit is tight for many in this country, making a home purchase difficult. In addition, potential policy changes, such as a minimum 20 percent down-payment on a home, have crippled potential buyers.
Though still a great market for buyers with good credit, now is also a good time to sell as there is demand for competitively priced homes.
For more information on how your local market is faring, check out our Local Housing Data page.
The table below details market specifics for the northeast: