Continue reading »]]> Leading economic indicators for the state fell for the 4th straight month, to 104.29, down 1.07% on an annualized rate.  Remember, and negative reading at or over 2% would indicate an oncoming recession in the state.  While we are pretty far away from that point, we are at the same reading we had in June of 2008, right before Iowa’s economy started turning down.  This will be one of the more important data points to pay attention to over the next couple months.  Especially if you are thinking of buying or selling your home!

We are living in unknown times.  For a headlight to steer through the fog, give me a call.  Maybe I can shine some light on the current situation and give you a clear direction for your home buying or selling decisions.

Continue reading »]]> The foreclosure & 90+ day delinquency rates remained elevated in October.  Data just released shows a slight rise in each measure.

I’m in contact with a lot of investors, and they seem to be the main buyer of these properties in Des Moines.  They are finding some great deals, fixing them up, and reselling them for a nice profit.  If you need help finding an investment home, please contact me at 344-1068.

Continue reading »]]> I was very interested in the December housing number.  Due to the unseasonably warm temperatures, I thought maybe we’d have some support or perhaps even a move upwards from November.  But, to my chagrin, the seasonal forces are too strong.  Prices dropped about $2,000, from $138,687 in November to $136,354 in December.  No reason for alarm though, since this is an every year occurrence, and our yearly growth rate has accelerated to almost 1% as measured on a yearly basis!  Hip hip… hooray!

Months of supply also dropped to 6.9 months, which is at the top range of a neutral market, close to the 7 months supply of a buyers market and still indicative of slight downward pressure on prices.

Continue reading »]]> Here are a couple real estate related data points I like to track on a monthly basis.

The most important of these is employment, which rose 0.6% from last year.  This number, while not great, is encouraging since it is the only the second month of positive growth we have seen in the last year.  We are finally gaining jobs instead of losing them.  Let’s hope this growth continues!

While employment is the BEST leading indicator of the housing market, another one is housing permits.  The number of permits issued grew at a 9% annual pace last month.  We haven’t see the seasonal drop in permits this year, which is very interesting.  Either we’ve hit a bottom, or the bottom will fall out over the coming months.  Looking forward to finding out.

Finally, interest rates continued their decline in December, down from 3.99% in November to 3.96%.

Think looking at data and leading indicators is beneficial to your house buying endeavor?  Me too.  Call or e-mail me to set up an appointment and we can discuss all the information available to make a great housing decision!

Continue reading »]]> Here is an update to most of the charts I think are important to the housing market in Des Moines & surrounding areas.

First housing prices.  They remain steady although the yearly growth rate does turn positive.

Next Employment.  I’m going to stop including the chart of the unemployment rate, since it is so misleading.  The rate continues to go down, which “appears” to be good news, but the number of employed people is also going down.  This is because many people have stopped looking for work (discouraged workers) or have been on unemployment so long they no longer qualify.  Lets do ourselves a favor and just look at total employment from now on, especially when looking for the direction of future housing prices.

The yearly growth rate creeps up, but is still negative, which means more people are losing jobs than gaining them.

Construction & manufacturing employment, another good leading indicator for housing prices.  Both remain quite strong.  Hopefully a sign for the future of total employment.

More leading indicators… residential construction permits.  You need a permit to build, so its an indicator of how home builders feel about their future prospects.  Up slightly, and the yearly growth rate turns positive.

Cost of new home construction gains and stays at about 5.5% on a yearly basis.  Not good news for home builders.

And finally, interest rates.  I heard someone from the Iowa Association of Realtors on the radio the other day say something to the effect of “housing is turning the corner due to low interest rates”.  I had to laugh in anger, and think “if interest rates played such a large role in supporting the housing market, why haven’t prices been going up the past 3 years?  It’s about jobs stupid”.  Then I apologized to the radio for calling it stupid.

Have a great holiday everyone.  There is hope out there for housing, but there are also headwinds.  Want to know which are stronger?  Give me a call.

Continue reading »]]> Total employment in the Des Moines & surrounding area continues to decline, albeit at a very small amount.  In September, total employment dropped 0.3% from a year ago.  That was better than a -0.48% & -0.58% reading for the two months prior.  Employment in the metro The good news is that the unemployment rate continues to decline, but of course, that is a poor indicator of job growth for several reasons.

If you’re looking for a Realtor that knows the market and studies data to determine where prices are headed, give me a call or send me an e-mail and we can sit down for a private consultation.

Continue reading »]]> For the third month in a row, housing prices in the Des Moines area have risen on a year over year basis, but by less than they did the last two months.  In October, prices showed a yearly increase of 0.03%.  The good news is that it is still positive!  The bad news is that it is as close to zero as you can get, and it is down from price increases of 0.34% & 0.49% in August & September, respectively.  Look for housing prices to muddle though until we seem some structural improvement in employment (check back Wednesday!).  And keep an eye on the leading indicators to predict where we are headed farther down the road.

Continue reading »]]> The leading economic indicators index for Iowa dropped to 104.4 in September from 104.5 in August.  The September reading equates to a -0.5% growth rate for the index over the least six months.  This is important because a reading of -2% would signal a recession warning for the state.  In order to get to that -2% annualized rate, we would have to see a index reading of 103.9 or below in the coming months, only 0.5 below where the index currently stands.  This is one of, if not the most important data points to keep an eye on over the next couple months.  A recession is be definition deflationary, which would cause havoc on the labor markets and housing prices in the Des Moines area.

Continue reading »]]> Many Realtors will tell you to “buy now!” because interest rates are low, and you never know when they’ll go back up.  They’ll tell you the monthly payment on a 100K loan at 4.25% is the exact same as a 90K loan at 5.25%.  Their argument, is that even if prices go down, you should lock in your interest rate now before rates go up.

Now in theory, this is quite true, but there is one huge fault with this argument.  Can you figure it out?

If so congrats!  If not, let me ask you a question.  If you sold your house in one year, say at 90K because the market hasn’t gone anywhere, how would those two buyers fare differently?

There is a huge difference in equity and outstanding mortgage amount due on each of the two loans from above.  Assume each buyer put down 5% for a down payment.

• On the 100K loan at 4.25%, you still owe the bank $93,398.  You are underwater, and are unable to sell your house.  That sucks.
• On the 90K loan at 5.25%, you owe the bank $84,294.  You have equity in your house and could sell in an emergency.  Nice job.

Continue reading »]]> The unemployment rate for the Des Moines area ticked down in September to 5.6 from an October reading of 5.9.  Most people would look at this as good news for housing, but the unemployment numbers have little to do with prices, and are flawed by such things as seasonal adjustments and discouraged workers.

So lets take a look at total employment, a much better indicator for future prices.  Actually THE best indicator.

As we can see from the graph, the seasonal decline in employment has started.  So instead of focusing on the raw data, we should look at the yearly growth rate.  Currently, we are still in the negative for growth, which would indicate a slight loss of jobs over the past year.  Not as bad as the last couple years, but it would be nice to shoot above the 0% line for a change.  It’s hard to imagine a recovery in housing without more people employed and making money.  Just makes sense right?

So what leads employment and which way is it going?  I know.  Do you?  E-mail me if you’d like to meet and find out.