Real Estate Market Commentary - December 2012
by Peter L. Zachary, MAI, MRICS
December is looking good for the housing market, but not as good for consumer spending thanks to Hurricane Sandy. An article from the
New York Daily News titled “Economic Blow: Sandy took a bit of wind from sails of recovery” from December 1, 2012 stated: "Americans kept their wallets in their pockets in October as super-storm Sandy walloped the East Coast and the economy muddled along. Consumer buying fell 0.2% from the prior month, the Commerce Department said. That marked the first drop since May. The storm, which shut down hundred of stores in the Northeast, helped keep many shoppers
away from malls and car dealerships. Consumers have remained upbeat even in the face of tepid job growth and wage gains, a factor that has helped prompt purchases although not enough to significantly propel the U.S.
recovery.Consumer spending is key, because it makes up about two-thirds of U.S. growth. Minus inflation, spending fell 0.3% for the largest drop since September 2009.”
It continued to say, “It likely didn’t help that Americans’ incomes were basically flat in October, Friday’s reports showed. The storm sucked an annualized $18 billon out of wages and salaries, but even without the storm, they would have been barely changed, TD Securities economist Millan Mulraine told the Daily News. Fears lawmakers won’t reach a deal on year-end tax hikes and spending cuts known as the
“fiscal cliff” have prompted some businesses and consumers to hit the pause button. “With the uncertainty that’s continuing in Washington affecting hiring and investment decisions by firms, we’re seeing that show up in consumer spending,” Mulraine said.
A report on business activity in the Midwest, also released on Friday, underscored the recovery’s tenuous nature. The Institute for Supply Management-Chicago business barometer expanded for the first time since August, but its gauge of new orders hit its lowest level in
more than three years."
In better news, the housing market unlike the consumer spending continued to climb. An article “A Home Run: Data shows house prices are firming up” in the Daily News on December 5, 2012 stated: "The housing market is beginning to heat up, a new report showed on Monday. Home prices across the nation posted their biggest jump in more than six years according to data analysis firm CoreLogic. From the same month last year, they were up 6.3%. It was the eight straight month of price
gains on a year-over-year basis, CoreLogic said.
After being pummeled during the recession, the housing market is finally begging to show signs of life. “All of the data is showing that house prices appear to have bottomed out and are firming,” Chris Probyn, chief economist at State Street Global Advisors, told the Daily News. From September, home prices fell 0.2%, mainly due to seasonal factors CoreLogic said. Minus distressed sales, in which homes in danger of foreclosure are sold at cut-rate prices, prices rose 5.8% from the same period last year. Higher consumer confidence and tentative improvement in the job market are setting housing up for sustained recovery. Although, the year-end “fiscal cliff” of tax hikes and spending cuts could threaten that if lawmakers don’t act soon, Probyn said. “If you can turn the cliff into a manageable ramp, I’m pretty sure housing is on the mend,” he said.
With the year coming to an end we can only hope for the best and even better news in the New Year. More to come next month...
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