Some interesting numbers
coming out lately.
First the U.S. Commerce
Dept. released a report new homes sales fell 2.4% in July. Then the Standard
& Poor’s / Case-Shiller Home Price Index for June decreased 13.2% from May
and 14.7% from April.
Well, those were the
headlines. But don’t lash yourself to the mast quite yet.
Delving a little deeper
into the stats, it turns out according Commerce new home sales are actually up
12% in the past year, and the S&P / Case-Shiller HPI shows an annual
increase of 8.1% nationwide.
You gotta love the way
the media tries to make this sound like this is somehow bad news. Only a few
short years ago people were praying for the market to turn around. Now an 8%
increase is a disappointment.
Of course, 6-7 months
ago, when property values were increasing over 20% year-over-year, the media
was screaming about a new housing bubble.
So thank your lucky
stars. Twice. This is good news on a couple fronts. As I’ve said before, we
were bouncing off a very low bottom. It only made sense to see a sharp uptick.
Now you see the rate of appreciation moderating, it shows common sense, that we
are avoiding another housing bubble.
Even so, many people who
are not sophisticated real estate investors continue to fall for this baloney.
In 2010, when the housing market in Fort Lauderdale had stabilized and was just
starting to inch up I told clients to start buying. Some did, have made a lot
of money. But others starting quoting stories off the internet about the fabled
“Shadow Inventory” – this looming wave of impending foreclosures which were
going to swamp the market once again.
For the record, we’re
still waiting for that wave.
Even more important in
these new numbers – home values across South Florida increased 11.5% in the
past year. Please note that is still significantly higher than the national
average, which was 8.1%.
If anyone's counting
(like me, for instance) that's 41% higher than the national average.
Meantime, I do not
understand how anybody can be sneering at an 11.5% return on an investment
secured by real property. With savings accounts paying less than 1% interest, I
don't understand why you are not dialing my cell number right now.
