My Mortgage Blog

I have been hoping to write this column for months. I’ve been wanting to say that the recovery is here, that the market is improving in a sustainable fashion, that we’re reaching the point at last where real estate helps to pull the rest of the economy out of the recession.

But I was gun-shy. I didn't want to commit myself after having felt betrayed by this market so many times. Like a little kid, I didn't want to jump into the pool until someone else did. I wanted to make sure I wouldn't be eaten up by sharks, I guess.

But here it is. The number of existing homes to close their sales in April rose by 3.4% above the number in March. It’s a very impressive jump, especially after the prior month’s disappointing 2.8% decline. But even that is probably good news: Intriguingly, the consensus of economists surveyed by Bloomberg had been that total sales would jump to 4.660 million, but this tells us that the current set of figures don’t result in an unexpectedly large jump in sales volume, which would have given them more of an impact on the markets. It also tells us that the world of economic analysts has pretty much caught up with the fact that the real estate sector is now truly in recovery. We can’t expect very few debates over the sustainability of recent sales volumes and price levels.

The numbers provide a good and important confirmation that the recovery is real in today’s real estate market. The gains were spread across the market; they were positive for both single-family dwellings (a 3% increase in sales) and condos (6%). And they were strong not only for the number of sales, but also for the prices, as the median home selling price rose by a strong 7.6%.

And this is likely to prove very important, too: Early analysis of this data finds that discounted and distress properties are playing a far smaller role in the real estate market at this point. The National Association of Realtors? (NAR) estimated that the number of distress sales in April totaled less than a third of all sales in the month. As a fairly obvious counterpart to this assertion, NAR also found that the smaller number of lower-priced homes on the market and among the sales is pushing the median price higher. The median home price, it turns out, rose by 10.1% year-over-year, and that’s the best number we’ve seen in over six years!

The number of homes on the market rose from about 6.3 months’ worth of sales at today’s prices and sales volume to about 6.6 months’ worth—but we might view even that as relatively good news. Perhaps sellers are realizing that the market is opening up and offering them better opportunities for a more advantageous sale, and are therefore putting more homes on the market.

Looking across the economic landscape, we notice that the other big story of the week—the initial public offering (IPO) of Facebook shares of stock—seems to have been a big disappointment. Even an incredible amount of hype, the price of the stock could not hold its highs. Perhaps, though, we can this to mean that we’re not on the edge of a frenzy of IPOs that could destabilize the strengthening recovery and detract from the advances in the real estate market.

Truly, all the news seems to be pointed in the right direction. It’s time to break out the bubbly, I think. This doesn’t mean it’s straight up the mountain from here, of course, but it does mean that the operative direction is up, higher, better…and our business—both quality and quantity—should improve as a result.