Positive Indicators Don’t Abound…But They Do Exist!

Posted by Jim DeBellis on May 23rd, 2011

I was looking for a ray of sunshine in the housing market to start off the week – no easy task – and I may have found it. While the national ivory tower gurus are still focused on foreclosures and declining values, some of the local realtors who are actually in the trenches battling the monsters see signs of hope.

Of course, every locality and region is different, but you can still look for these signs of life in your neck of the woods. Some Arizona Realtors find reason for optimism in three factors. For starters, month-to-month sales have remained steady over the past two years. That means that, regardless of the lack of government cash and tax credits this spring, they are selling just as many homes each month as they were in 2009 and 2010.

Secondly, While foreclosures will still be a major factor for years to come, they are losing market share to short sales. The encouraging sign here is that many lenders may be wising up to the fact that it’s better to take a hit now than to go through the expensive foreclosure process, carry the taxes and maintenance for many months, and then still sell at an even bigger loss later. Bank of America now has an online process that removes a lot of the time-consuming red tape. This could be a good sign for the market and a good way to keep the market moving and nip some foreclosures in the bud – but more big lenders will have to streamline and speed up their painfully slow short sale process to attract more buyers at this stage.

Another good sign for the marketplace is a sharp reduction in the number of new single family listings flowing into the market. With a three-year glut of foreclosures and more on the way, there is no shortage of inventory, so fewer non-distressed listings will give the market a better chance at clearing the backlog much faster.

These same conditions may or may not exist in your city, but if you look for positive indicators you might just find a few.