This is from the “Real Estate Market: Beyond the Headlines” column in the Bullhead Area Chamber of Commerce Newsletter, which makes the writing is a little out of context, but I wanted to share it here since the newsletter only goes to members.
This column was born five years ago amid a media feeding frenzy that surrounded a collapsing real estate market.
Every headline was a tragedy – if it bleeds, it leads. And real estate was bleeding.
While much has changed in our world, media coverage – in all its tragic glory – has not. If it still bleeds, it still leads, even when so much of the bleeding has healed and continues to heal.
So I repeat the opening line of this column from 2007:
“I’d like to interrupt the barrage of negative media coverage of the housing market to look past the headlines for just a moment. ”
Have we hit bottom?
Here’s the truth, put it on my permanent record: YES.
127 homes sold in Bullhead City in December of 2005. Two years later that number dropped to a measly 32 homes sold, the lowest in at least a decade. In that lowly December of 2007 the market hit bottom in terms of units sold.
Of course price didn’t bottom out then, but that was the first indicator.
Here’s why…
Supply drives price
From 2003 – 2006, appreciation was off the charts and homes were flying off the shelves. In a classic seller’s market, homes were selling faster than they were being replaced.
Then the proverbial music stopped. All at once inventory started to back up and a very unhealthy buyer’s market emerged. The rapid appreciation reversed. Prices plummeted.
The healing of this unhealthy market actually began four years ago, after that bottoming-out of sales in December, 2007. With inventory dropping and demand increasing, the market was slowly on the mend. But the question remained, when would prices bottom out?
Home prices drop 58% in 5 years
(There’s that bleeding/leading headline)
The median sale price of homes in Bullhead City fell from $193,000 in 2006 to $80,000 in 2011. Going beyond that headline, here’s what that looks like year by year:
With inventory at a five year low, prices adjusted sharply in 2011. The median price was still down by 6% across the board, but that was a major improvement from the previous five years (which culminated in a 26% annual drop in 2010).
If you dive deeper there are clearly segments of the market that are seller’s markets
This is one that the media misses altogether, but talk to any local Realtor or anyone who has been out shopping lately and they will tell you what it’s like trying to buy a house under $150,000 or so. Multiple offers as they compete with other buyers for the same property. Bidding wars often follow.
These are classic signs of a seller’s market.
The bottom was behind you
The surefire way to know when prices hit bottom is when they start going up. Of course at that point the bottom is behind you. The only other thing you can do is look for clues, and there are lots of them out there. You just won’t find them in the headlines.
{ 1 Comment }
