Real Estate Market Commentary - July 2012
by Peter L. Zachary, MAI, MRICS
July was a month of disappointments for the housing market. Despite the signs of an upcoming recovery in recent months, home sales are back on the decline. An article on the New York Times website from July 25, 2012 titled “Decline in June Home Sales Reinforces Uneven Recovery” stated:
“Sales of new homes recorded the biggest drop in more than a year in June, and prices resumed their downward trend, dealing a setback for the budding housing market recovery. Single-family home sales tumbled 8.4 percent to a seasonally adjusted 350,000-unit annual rate, the lowest rate in five months, the Commerce Department said on Wednesday.
The percent decline was the largest since February 2011.
“Housing will continue to recover gradually throughout the year, but fundamentals are not supportive of a fully fledged housing market recovery,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York. The drop in new-home sales last month came on the heels of a decline in home resales
during the same period.
Housing had appeared to be bucking weakness in the broader economy, which has
experienced a sharp slowdown in job growth and a cooling in manufacturing against the backdrop of fears of tighter fiscal policy in Washington in early 2013 and a lingering debt crisis in Europe.
“It is hard to believe that the market is turning downward when the home builders’ confidence index jumped in July to its highest level in over five years,” said Joel Naroff, chief economist at Naroff Economic Advisors. “Either developers are clueless or the data have yet to catch up with reality. I am on the side of the latter.”
Adding to the bad news for the housing market, a similar article in the July 25, 2012 Daily News titled “In Mixed Company Home Values Rise in Only 2 of the 5 Boros”, shed light on the current status of the dropping values in our own backyards. The article stated: “New York City home prices rose in the second quarter, but only some boroughs are enjoying the party. Led by nice gains in Brooklyn and Manhattan, New York City home prices rose 0.3% compared with the same period last year, according to a report from Zillow.com.
The big winners were Manhattan, where prices jumped 8.3%, and Brooklyn, where prices were up 3.8%. But the other three boroughs were all down, with prices in the Bronx falling as much as 5.2%. Certain neighborhoods showed especially big surges in prices, including Bedford-Stuyvesant, where values jumped 24.3%, Fort Greene, which rose 22%, and Morningside Heights, which was up 20.7%.
There is a pretty wide variation," Stan Humphries, chief economist for Zillow.com, told the Daily News.”
It also stated: “Overall, New York City's housing market has been bouncing along the bottom for about three years, Humphries said. It has fared better than the larger New York metro area and the country prices in the New York metro area were down 2.7% in the second quarter when compared with last year, but they rose 0.8% compared with the first quarter. "The New York metro area has stopped its decline," Humphries said. While the report pointed to continued stability for the city, it provided some signs of recovery for the nation's housing market.
Property values rose 0.2%, the first year-over-year increase since 2007. Values have risen for four consecutive months. That has prompted Zillow to declare a bottom for the long-struggling U.S. housing market. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own," Humphries said. Let’s hope that the predictions for the nation’s housing market recover come true in the
near future. Hoping to have better news to report next month.
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