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New Year, Same Soapbox!

January 3, 2011

The housing market overall is pretty similar to last month.  Pending home sales rose again in December, that is the 5th month out of 6 that has occured.    We are seeing gradual signs of a housing recovery, but it is a mixed bag.  Let’s get into new construction for a moment.   We have started to see some numbers trending upwards here.   New home sales surged in December to their highest level in 8 months, and prices were the highest they have been for new construction since April 2008.  This is one really great way to gauge how the housing market is really doing.  New home sales jumped 17.5% from November to December; this is encouraging, especially in a traditionally slow part of the year.  However, we must take this all with a grain of salt.  Compared to December of last year, sales were down 7.6%, and overall 2010 new home sales dropped 14.4%.  This tells me that 2010 really was the bottom of the bottom of this overinflated market. 

We are now starting to see some stablization in the housing market.  One key indicator of stability is inventory levels, and the inventory of new homes on the market is at its lowest since the 1960s.  This is a 180 degree turnaround from what we were seeing in the early to mid 2000s.  I saw it happen first hand.  Builders, producing homes purely on speculation, overbuilt extremely, then in late 2007 and 2008 when the market started to crash, they just straight up stopped building.  Just recently, those new homes that were just sitting there for the last few years are finally selling, albeit at discounted levels.  So the inventory is way down, and builders still really aren’t coming back into the market.  In Fort Collins, the only ones that are selling with any frequency are homes under $250,000.  Those are actually selling pretty well.  I would venture a guess that most markets in America are seeing the same thing.

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