The National Association of Realtors just released data showing sales of existing homes jumped 5.1% in February over January’s lowest level on record. In contrast, the national median sales price fell 15.5% to a low of $165,400.
When comparing the national median sales price to household income, we find that prices are 2.9 times that of income. Two years ago prices were 4.5 times more than household income.
Investors should keep in mind that these are “national” numbers and should only be used to gauge the overall real estate climate and trend. This will not typically apply to your local real estate market as we know that all real estate is local.
After the 1982-1983 recession, the worst recession since the Great Depression, home prices had rebound during the real estate boom that lasted five years from 1984 to 1989. Will the current recession be the same?
Not likely! We are currently dealing with over 9.7 months of housing supply. It is going to take some time for demand to catch up to this level of supply and a real estate boom will not likely follow. We are unlikely to see an improvement over the next two quarters, however, we should start to see an increase in demand starting in 2010 along with some nominal appreciation over the few years following.
Should this hold you back from investing today? Absolutely not. We are at or near the bottom of the (national) real estate market and there are many opportunities available today. Along with historically low interest rates, this is a great time to add to your real estate portfolio.