April 25th, 2010 Recovery

Posted On April 25, 2010

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April 25

Steamboat real estate market statistics is a bit of an obsession of mine. They predicted the market collapse and will guide us out of price depreciation. Before we can view the local market we must make sure the national market is not going to derail the recovery Steamboat is making.

More people are buying homes and we are well off the slowest point of mid 2008. The months supply is back down to a stable point and approaching a sellers market. The recession ended in 2009.

Mr. Bernanke and the fed will keep interest rates historically low although they will still rise from here consistently for several years. The fed is aware of the housing problems still prevalent in the world and will not do anything to disrupt the recovery.

The two biggest factors to watch in this recovery are the foreclosure turn around and the unemployment problem. Unemployment picture has been improving for about 5 months now. There are predictions we will go from our current 9.7% to 10.3% by year end. There are other predictions that we will see modest improvement each month of .1%. Either way, we are no longer escalating higher like we did during the recession. We are on the mend and improving faster than we did during either of the last two recessions.

Thursday RealtyTrac announced that foreclosure filings set a record in March, 2010 with filings reported on 367,056 properties. This is the highest since they began reporting in January 2005. Again we have a silver lining or two. More than half of the foreclosures are in 4 states, so it’s not a completely national problem. The second silver lining is that the pace of foreclosures is subsiding for the most troubled states where the number of foreclosures peaked in the 1Q of 2009. Foreclosures are a lagging indicator so as employment gets better, foreclosures will follow. But the increases each month are becoming less and less and a turn around is evident.

The home price index below shows that the prices across the country have stabilized. In many areas, prices are expected to rise by more than 10% during 2010.

On to Steamboat; the months of inventory has been decreasing from 60 at the peak to about 40 now. Depending on what market segment your are looking at. The months of supply peaked about a year ago and since then the number of properties on the market has fallen and the number of pending (under contract) properties has increased. The ratio now is about 5% and needs to be between 10-15% for the market to be stable. This movement can come very fast; looking back at the January 2008 jump with the Interwest purchase. The fastest it will probably happen now is about 4-5 months and could take a year. The demand has been outpacing supply for a year now and we are slowly digging our selves out of inventory abundance.

In SUMMARY the national market is on the mend and shouldn’t slow down the Steamboat Springs real estate recovery. It is possible that Steamboat will reach a price stable point by year end but more likely it will be next spring. The chance of the market stagnating through 2011 is very small. And interest rates will be higher at that point. Economist polled say interest rates will increase by .7% by year end 2010 and maybe another 1% by the end of 2011. Visit www.SkiTownRealty.net for Steamboat information.


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