The small businesses that drive the housing market are reporting signs of a real comeback.
At the beginning of the spring selling season, real estate agents and home builders were optimistic about the growing number of prospective buyers showing up at open houses and calling to inquire about listings. Now, it appears that interest has translated into sales.
We had a terrific March, better April, and May is going to be the best closing month since 2006, says Mark Prather, whose real estate agency, ERA Buy America Real Estate Services, is in La Palma, Calif., on the border of Los Angeles and Orange counties. Closings are up 50 percent this year from the same period of 2011.
Its a similar story across the country. Prices are lower after plunging during the housing crisis. Rising rents are making buying more attractive. On top of all of that, financing is cheap. Mortgage rates are at record lows 3.75 percent for a 30-year fixed mortgage as of May 30. In some areas, people are even saying its becoming a sellers market.
Industry and government figures confirm that housing is recovering. The National Association of Realtors says more than 1.3 million previously occupied homes were sold from January through April, up 7 percent from more than 1.2 million a year earlier. The Commerce Department says 117,000 new homes were sold during the first four months of the year, up nearly 15 percent from 102,000 a year ago.
But the sales recovery isnt uniform. Although home prices have started to rise in many parts of the country, theyre still falling in places like Detroit, Chicago and Atlanta, according to the Standard & Poors/Case-Shiller home price index for March.
The unevenness is reflected in the Treasure Valley, where Ada County real estate agents and sellers are pleased, but Canyon County is still struggling.
Year-to-date sales in Ada County rose 11 percent through April, while median April prices were up 19 percent from a year-earlier level to $158,777. Homes were on the market an average of 70 days, down from 91 a year earlier. The dollar volume of April sales was up 33 percent to $121 million.
In Canyon County, year-to-date sales fell 9 percent, though median April prices were up 9 percent to $87,150. Homes were on the market 82 days, down from 90. Year-to-date sales totaled $94.6 million, down 1 percent.
The numbers reflect an improvement from a weak spring in 2011, but isnt yet what you could be considered robust. A Realtors index that measures the number of home sales contracts fell in April. The spring selling season got an early start because unusually warm weather in January and February encouraged many people to start looking at houses, and that may have taken away some sales from April.
But the drop also coincided with signs that the job market was slowing and a decline in the stock market. The Standard & Poors 500 index fell nearly 1 percent in April, its first month with a loss since November. That may have led some potential buyers to pause. Another wrinkle: fiscal and banking crises in Europe and their potential effect on the global economy.
You watch the news, the economy is not good, theres negative news about Europe and the global economy, Prather says.
That caution extends to owners who run companies that serve builders such as Central Reclamation, which performs demolition and has a business drilling into hillsides so that mansions can be built on them. Ron Fox, who runs the company, based in Los Angeles, says he has more work now than he has had for three years. But the increase is coming from the upper end of the price scale, he says. Hes not seeing much construction in mid-market single-family homes.
Im not trusting it to the point where Im going out and buying equipment, says Fox, who also says the high cost of diesel fuel that he needs to run his equipment and trucks is pressuring expenses.