Do you trust your data sources?   With so many different sets of data out there, it can be tough to know which one to use.  A couple weeks ago, the National Association of Realtors (NAR) announced that they would be making substantial revisions to their existing home sales data going back to 2007, and noted that they had overstated the volume of sales during recent years due to a number of factors.  In their defense, the Realtors have a tough job: they rely on data from their various member multiple listing services (MLS) and then have to estimate the number of transactions that occurred outside of MLS or outside of the coverage area.   Here at Hanley Wood we are fortunate to have Housing IntelligencePro, which, instead of relying on MLS or estimates, calculates activity based upon actual closing records from each municipality.  Based on this data of real transactions, we had always thought the NAR numbers were a little elevated.  Prior to the revision, they had estimated existing home sales fell a total of 31% between 2005 and 2010.  Meanwhile our figures from Housing IntelligencePro indicated that during the same time frame, resales fell by over 45%.  Post revision, NAR’s numbers have moved much closer to ours and reflect a 41% decline.  Going forward, we’re glad we don’t have the same task of estimation and guesswork that those without complete data are faced with.  As the song goes, “Ain’t Nothing Like the Real Thing.”

Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases.  Between tight lending standards and a desperate search for yield by investors, cash purchase of homes (especially distressed properties) became even more common in 2011 than last year.  According to data from Housing IntelligencePro, 38% of homes purchased in 2011 were bought with all cash.  That’s up from 34% in 2010, and double the 19% rate in 2006.  The trend is likely to continue in the near term, with investors being responsible for an increasing share of home purchases as prior home owners abandon the ownership market and head back to rentals.

“Investor” used to be a dirty word back during the housing boom when short-term flippers pumped up the demand for all types of homes, including new construction.  The downside to flipper investors was their short term horizon and their propensity to avoid options and upgrades and instead go for the cheapest homes available.  Additionally, even today many argue that investment activity is bound to re-enter the market at some point, so the perception is that investment activity is not good.  But for housing overall, the investor share of all purchases was actually higher in 2011 than in 2005, and we can be thankful for that as it is serving to clear much of the distress and oversupply of existing housing.

According to data from Housing IntelligencePro, the El Paso, TX MSA leads all markets in terms of year-over-year gain in new home closings for metropolitan areas with at least 300 new closings in the third quarter.  With 43% more new closings in the third quarter of 2011 compared to a year earlier, El Paso was easily in first, followed by Boise City-Nampa, ID with a gain of 35% and is the only market in the top 5 not in the South.  Cape Coral FL, Charleston SC, and Nashville TN round out the top 5, although all of these areas saw fewer than 1,000 new home in the third quarter.  Houston-Sugar Land-Baytown, TX is number six, and the top large market with more than 4,700 new home closings in the third quarter, a gain of 19% over the prior year.  Nationwide, new home closings in the third quarter were off by 6% from a year earlier.

We’re focusing on Philly new homes this week as we’ll be in Philadelphia on November 9th at the Penn’s Landing Hyatt Regency Hotel for our final fall Housing Seminar.  If you’ve been wondering what juicy data tidbits we share with the audience, this is your last chance until spring!  New homes data released last week showed that new home sales nationally were still down compared to last year and unfortunately Philadelphia was no exception to this.  But upon taking a deeper look into the data, it’s clear that all new homes are not created equal.  According to data from Housing IntelligencePro, new home closings in projects that opened after 2010 are selling much better than those that were open prior to 2010.  During the first nine months of 2011, new home communities experienced on average 3.44 closings per project in those communities that opened in January 2010 and beyond while new home communities that opened in December 2009 and before only experienced an average 2.16 closings per project.  The average closing price for the newer communities was also more competitively priced at $308,000 compared to $348,000 and slightly bigger at an average 2,296 sq. ft. compared to 2,126 sq. ft.  Interesting, isn’t it?  Want to know more?  Come join us on November 9th at the Hyatt Regency on Penn’s Landing for more in-depth local analysis for the Philadelphia region.

On October 26th, we're making our way to the Bay Area to continue our series of fall housing seminars at the Crow Canyon Country Club in San Ramon.  Like many areas across the country, the San Francisco Bay area saw substantial foreclosure activity during the housing bust, but which is now well off its peak.  Our data feature this week, courtesy of Housing IntelligencePro, tracks the improvement this year.  Foreclosures have been falling steadily through 2011, in part because of slow stabilization in the housing market but also because large banks have pulled back from seizing as many homes over the past year due to problems stemming from the “fraudclosure” debacle.  But even if we may see some more waves of foreclosures in the future, they are not likely to get near the highs of 2008/2009, and the pause is helpful in giving the market time to absorb some of the distressed units which aids in price stability.  Hey, in this housing market, every bit of good news is welcome.   For more in-depth insight on how to navigate this difficult market along with some other “silver linings,” please join us next Wednesday, October 26th in San Ramon, we look forward to seeing you there.