Have you ever noticed how the mainstream news media just can’t seem to get hold of any good news at all and keep it in the positive?  It seems no matter what comes down the pike the media always has a ” Yeah, but…”

Here’s an example:

According to the National Association of Realtors® (Yeah, I know the Realtor® organization.  They’re the ones that compile the statistics.  What can I say?) existing home sales rose in February by 5.1%.  That’s a pretty good jump.

Here’s another part of that, according to the article:

Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges.
—Existing Home Sales Rise In February

So, to me, this says that first time home buyers are being attracted to the market by the $8,000 tax credit for first-time home buyers enacted as part of the Stimulus plan and the extremely low interest rates for 30-year fixed rate mortgages. That’s good news!

But wait!  This is what the media glommed onto because, hey, it can’t be all that good:

“Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”
—Existing Home Sales Rise In February

So….. home sales are rising. People, especially first-time home buyers, are buying homes but that’s not good because Housing Market on the Upswingthe homes they’re buying are “distressed” or “less than normal market price” or whatever.  What this means is that people are buying “short sales” and bank-owned properties and fixing them up themselves to live in and raise their families.

When A Sale Is A Sale

Here’s a real news flash! When a home is sold, when real estate is transferred from one person (or entity) to another it is considered a home sale.  It’s not rocket science.  The home sale doesn’t have to be for a certain amount of money.  The home sale doesn’t have to be from person to person.  The home sale still generates revenue for the State and County through the transfer and recordation fees.  In fact, back property taxes are paid at closing so the County gets a few more dollars.

In other words, all home sales are good home sales.  I would even go so far as to say that home sales of “distressed” properties are especially good because it helps flush the dogs from the system.  The home sales help reduce overall inventory and create home price stabilization.  Good for both Sellers and Buyers.

Is This The Start Of A Trend?

Honestly, I don’t think so.  I really like to get three to four months of steady movement in the upward direction before I would call an upturn.  That’s really the interesting part of trying to “time the market”.  You don’t know you’ve hit the bottom of the housing market and turned up again until after it’s happened.

However, the planets are starting to come into alignment:

  • the $8,000 first-time home buyer tax credit
  • mortgage interest rates at or below 5% for 30-year fixed rate mortgages
  • low home prices (even regular, “plain vanilla” homes are priced competitively)
  • FHA backed mortgages with flexible credit standards and only a 3.5% down payment requirement.

Whether or not enough people take advantage of all this on a continuing basis is hard to say.  I don’t have a crystal ball.  No one does.  In fact, in my previous post, I mentioned that there are several reasons to stay out of the housing market.

So stay tuned.

In the meantime, this is good news…NO but.