Encouraging real estate newsPublished 11:26pm Tuesday, November 5, 2013
Recovery from the economic recession of 2007-2009, at least in Main Street America, often is measured by the health of the real estate market.
As go home sales, so goes an economy like Suffolk’s.
On that front, the news is mostly good, local Realtor Lee Cross told Suffolk Rotarians last week, with home sales and prices rising and up very nicely from the depths of the national real estate crash five years ago. Caution signs remain, however, notably the high number of “distressed” sales amid the improving numbers.
Among some of the encouraging numbers shared by Cross:
- Suffolk’s inventory of homes for sale has returned to normal levels of five to six months, meaning that if no additional homes were listed, it would take that long to sell off the existing inventory. By comparison, inventory exceeded nine months in the summer of 2011.
- The 798 houses listed for sale as of Oct. 29 is almost unchanged from 778 listings in March 2012, the last time Cross updated Rotarians, but the number of homes sold in the last 90 days is up sharply, from 206 then to 361 now. Seasonal fluctuations (more homes generally are sold in late summer and fall than during the winter) account for much of the increase, but the improvement is still encouraging.
- The year-over-year increase in average sales price was steady at just above 12 percent from April to July, compared with less than 1 percent in the summer of 2012.
- The average price per square foot of homes sold in Suffolk over the past 90 days was $104, up seven percent from $97 in March 2012.
Now for the cautionary numbers:
While distressed sales, defined as foreclosures and short sales, have dropped nationally as a percentage of total sales, from a whopping 35 percent in January 2012 to 12 percent this past August, distressed sales in Suffolk have remained disturbingly high, north of 25 percent, throughout the real estate recovery, from 2010 to today.
Cross cited Hampton Roads’ high percentage of military personnel and government workers, who have been hit hard by sequestration and other budget cuts. Inability to pay the mortgage has hit families of all income levels. Even Riverview, the signature residential neighborhood of Historic Suffolk, has seen nearly 30 short sales and foreclosures in recent years, Rotarian and fellow Realtor Billy Chorey noted.
Realtors also are keeping a close eye on interest rates, which dropped to historic lows the past couple of years, fueling much of the activity in the real estate market. Rates have crept up in recent months, and most analysts expect the average rate for a 30-year fixed mortgage to be above 5 percent by the end of 2014. (Who’d have thought we’d ever whine about 5 percent mortgages?)
Cross noted that even a 1-percentage-point increase in the interest rate, as is projected over the next year, can put a $162-a-month dent in a buyer’s purchasing power. That will surely affect purchasing decisions, ranging from the price buyers are able to pay to the neighborhoods where they look.
Regardless, the trends in real estate, for the first time in a long time, are mostly favorable. The boom economy of a decade ago set an unreasonable standard. It was a bubble that was bound to burst. Recovery, to a more sustainable level, built on a firmer foundation, is well under way.
Steve Stewart is publisher of the Suffolk News-Herald. His email address is firstname.lastname@example.org.