January is normally one of the worst months for real estate activity, for good reason. Cold, snow, and other seasonal hangovers do not translate into a busy market. So, its a hopeful sign that there have been some positive news stories in the last few days. First, home inventory levels dropped in December — not as much as in years past, but the fact that they dropped at all in the current climate is good. Fewer homes on the market means a tighter supply and some price stability returning. According to the monthly ZipRealty survey, Baltimore’s inventory level dropped nearly 6%. The other hopeful sign came out just yesterday, when December sales of previously owned homes were released by the National Association of Realtors. According to their data, home sales in December rose a robust 6.5% during the month on a national basis, the biggest monthly jump in nearly seven years.
Many of these sales, no doubt, were sales of low-priced foreclosures, but far from discounting the good news, I think that actually is incredibly positive. First, we need to eliminate the foreclosures from the marketplace before we will see prices begin to stabilize on occupied homes for resale. Second, these sales mean that investors are finally returning to the real estate market, since they are the buyers most likely to purchase a foreclosure for repair and rental purposes. Lastly, clearing the market of foreclosures will stabilize the lending institutions that have taken possession of them, and hopefully begin to unfreeze the credit markets for other qualified buyers.
Will any of this happen in the short term? Of course not. But the latest good news might mean that we’ve taken a few steps down what will definitely be a long road. Its a start.
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