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Housing prices are declining at a yearly pace of 4.5%.  This significant downturn is worse than the time period following the financial & housing crisis a couple years ago.  Readers of this blog should not be surprised.  We’ve been looking at negative employment growth and the Iowa Leading Indicators Index was in dangerous territory for the past couple months.

I’m sure you’re hearing how good the real estate market is or how prices have hit bottom.  That information either isn’t local, based on number of sales and not prices, or is based on NON seasonal adjusted figures, which always go up because of the weather this time of year.  The facts don’t lie.  Housing prices in Iowa have headed down again.

“Less people in Des Moines have jobs compared to this time last year.”  That statement would now be true 38 of the last 40 months.  Hard for housing prices to rise without job growth.

Still high.  I wonder what the rate would be if we included all the part time workers looking for full time work or the discouraged people not looking for jobs?    7%?  8%? 9%? 10%?

The leading indicators have bounced off their lows and away from recession risk.

Interest rates are still low, and should be for some time.

The cost to build a new house continues to climb, but by a smaller amount.  Home builders must be having a hard time keeping costs down.

90+ day delinquencies and foreclosures remain elevated, although not as bad as the rest of the country.  Expect this trend to continue for 2 – 3 years, at least.

These are leading indicators for jobs and the economy as a whole.  These give us some hope that a turnaround is somewhere in the future.

Another leading indicator for housing.  Coming from such depressed levels, I would expect these to grow between a yearly pace of 0 – 50% over the next several years.  Remember, we are only talking about increases from 100 homes per month to 125 homes per month, a 25% increase, as an example.

If you have real estate questions, such as buying or selling a home, I am available for private consultation.  Contact me to set up an appointment.

Continue reading »]]> Sorry I haven’t updated my blog in a while.  I recently took a position at Nevitt Real Estate in Perry, so I’ve been busy with the move.  Although I’m no longer specializing in the Des Moines market, I still do occasional business there and will try to continue to be your source of housing and economic information for the area.  Let’s get to the data…

Housing Prices dropped off a cliff over the past two months.  Prices are now trending lower at a 3% annual rate, when just two months ago they were trending positive.  So what happened?  Perhaps an unusual amount of foreclosures were bought.  Perhaps the warm weather in November & December brought sales forward.  Perhaps we had such a good summer the market is just taking some time off.  It’s hard to tell.  The data was too good this summer and it is too poor recently.  Expect things to even out over the next couple months and for housing prices to remain flat to slightly down based on the other data I collect.

Employment, our best leading indicator of housing prices, remained steady.  We’ve been hovering around the 0% growth mark for the past two years.  We need to see some employment growth before anyone starts talking about a housing recovery.

Iowa’s Leading Indicators Index, our best indicator of future employment,  avoided a recession warning (-2%) and bottomed out in November.  That’s good news.  This index is predicting little to no employment growth in the near future.

Some other leading indicators are looking much more bullish.  Manufacturing and construction jobs continue to rise.  When people return to making and building things, it’s a healthy sign for the economy in general.  Construction permits also turned up slightly.

And finally, just a few more charts of interest…

Foreclosure activity remains high.

The price of constructing a new home continues to climb at a yearly rate of about 4%.

And interest rates are low.  But I’m sure you already knew that.

If you have any questions or comments, please call or e-mail me.

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.