Comes a newsletter from the predominant Realtor in our neighborhood, the ineffable Sandy Goodheart. She reports that she just unloaded a house in the neighborhood for a mere $325,000, not bad under the circumstances. Then she adds,
The real estate market has improved dramatically since the first of the year. In January of this year, the inventory of homes for sale stood at about an 11-month supply. A balanced inventory is between four and six months. As of Memorial Day, the inventory stood at a 4.5-month supply.
Of course, what she’s not saying is that the drop in inventory came from foreclosures and short sales. Foreclosures in particular have become so hot that buyers are bidding up prices. La Bethulia missed the boat twice in efforts to buy foreclosed properties in our area; she eventually bought a nice little place near M’hijito’s downtown house, to rent to the two nieces.
That notwithstanding, it’s a good sign. Before the real estate market could even begin to recover from the burst bubble, we needed to clear the flood of foreclosures and houses that couldn’t be sold when lending dried up. If it’s true that the inventory is about back to normal, we should see real estate values begin to appreciate at their former stately but dependable pace.
In fact, that’s about what’s been happening, if you pretend the bubble never occurred. I bought my house right before the inflation started. Assuming Zillow’s machine-generated estimate of its present value is roughly correct, it has appreciated at about 4 percent a year over the past five years.
As for the downtown house, this development means there’s a good chance the credit union’s loan officers are right that by December its value will increase enough to put us rightside-up again. Right now nothing is for sale in that neighborhood. With one possible exception, the foreclosures have sold, and no new ones have come on the market.
The damnable City has decided to turn down the stimulus money that would have completed the light rail line up the main drag past my neighborhood. That’s bad for the area where I’m living (since the city has already ripped out homes facing that road before it decided to suspend construction, trashing nearby property values), but good for the downtown house: it makes close-by light rail a rarer commodity, and that will increase its perceived value…jacking up the real value of neighborhoods near it.
Alors, ça marche.