Spike in Existing Home Sales Inaccurate

question_mark_houses__fotosearchFollowing a story MHProNews posted earlier regarding a significant rise in existing home sales based on numbers of the National Association of Realtors, Dave Kranzler, writing for seekingalpha, says when the numbers are put into a longer range historical context, there is “more sizzle than substance.

Home sales were said to be negatively affected by the weather in Q1 2014, so by comparing 2015 numbers to Q1 numbers in 2013, data indicates home sales were basically flat on a monthly basis, and the ten percent rise for March 2015 over March 2014 is misleading.

Further, historically speaking, first-time homebuyers have made up 40-50 percent of the homebuying market, but that has fallen to 30 percent in March 2015, and has been declining since 2009, just after the recession began to take its toll.

Says Kranzler: “The first time buyer is the most important fundamental buyer cohort because the move-up buyer typically has to sell its home before it can upgrade. The relative lack of buying from first time homebuyers, and therefore depressed buy/sell activity by move-up buyers, is the primary reason the housing market has not staged a bigger recovery since the housing bubble popped.”

He says most of the increase in sales, since the Federal Reserve began Quantitative Easing and dropped the interest rate to near zero, have been to investors and individuals who are interested in flipping the homes. He says investor interest has been declining since early 2014, and will drop further.

Statistics demonstrate that homes in the lower price range are not selling all that well because it is the upper income demographic that has benefited from the stock market’s rise. Kranzler says it is vacation home sales that have buoyed the market, and they are not the underlying basis of a healthy housing market. As they fade, home sales will fall significantly. ##

(Image credit: fotosearch–question mark houses)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. silver to Daily business News-MHProNews.

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