Tyler / East Texas Housing Market Improves

The heat in East Texas this year was oppressive and kept many of us inside where it was cool. However, despite the less-than-desirable conditions this summer, the Greater Tyler Area housing market has shown some improvement over the second half of the year. In this article we'll explore the numbers that drive the local real estate market and give our assessment of what they mean.

Home Sales

Compared to the same 12 month period a year ago, cumulative home sales through October 2011 were up slightly (3.97%). Since May, sales have been trending higher than same month prior year sales with October sales about 12.4% higher than October 2010 sales. October sales were about 12% less than September 2011 which follows the typical trend. With the last 5 months trending above previous year marks, and the year-to-date totals up slightly, we moved the overall trend up as a reasonable sign of sustained year over year improvement. We would expect, based on current trends to see winter months sales decline as normal, but still trend higher than the same months last year.

Median Home Prices

Compared to the same 12 month period a year ago, median home prices remain relatively unchanged. Median home prices, while having some seasonal variability, have remained relatively steady and, since March, 6 of the 8 months have been trending slightly higher than the same month previous year.

Inventory

Compared to the same 12 month period a year ago, monthly inventory of available homes has been steady. Over the last 6 months, current months inventory have been staying relatively unchanged compared to the same month previous year. Most recent months have seen a slight drop compared to same months previous years as a result of increased sales during that period. Available inventory for October was virtually unchanged from September - down about 1%.

Months of Inventory

The months of inventory (MOI) data indicates the time to sell all current available homes based on current absorption rate or sales rates. The most current MOI is 13 months (down from 13.3 months in September). Through August, year over year MOI had been trending slightly upward as a result of both higher inventory and slower monthly sales earlier in the year. The last 2 months have trended slightly downward compared to the same months last year, but not long enough as of yet to determine if that is a sustained trend. Inventories tend to trend lower during the last 3 months of the year due to holidays. Inventory rates above 6 months indicate a buyers’ market, where there is an abundance of available homes compared to qualified buyers. A number below 6 typically indicates a sellers’ market where the demand for homes is greater than the supply. As a general rule, all other parameters being equal, home prices will trend lower in buyer markets and higher in seller markets.

Local Unemployment

After several months of trending downward earlier in the year, local unemployment rates have climbed recently trending above the 2010 levels - 8.3% in September (compared to 7.3% in September 2010). Through May, unemployment levels had been slightly lower than the same months last year. Higher unemployment still continues to be the primary contributor to a lackluster housing market.

Mortgage Rates

Mortgage interest rates continue to linger at historically low levels. The most recent weekly benchmark 30-year fixed rate as of 11/28/11 was 4.25% up slightly from the previous week’s rate of 4.23%. Historically low mortgage rates continue to provide some momentum to the market. Because of the impact of these low rates, sellers can more than make up for the lower sales prices they may see when selling their homes, making this a great time for moving up.

New Construction / Single Family Permits

12 month rolling single family permit numbers continue to trend lower than the same months last year. The most recent average has been trending slightly upward but still at a pace less than the same month last year.

Local Market Summary

Currently considered a buyers’ market where inventory exceeds demand. Recently, inventories have been reasonably steady and home sales have been outpacing the same months last year indicating signs of an improving home market. Median prices have continued to trend relatively steady; however, with inventories still historically high and likely to climb, there will be pressure on sellers to lower prices as buyers continue to be spoiled by choices. Low interest rates continue to provide some momentum for buyers; however, that is tempered by more rigorous qualifying guidelines and a tepid overall economy - still sluggish from higher levels of unemployment. Bottom Line - while we are beginning to see some very modest year-over-year improvement in the local housing market, likely expect more of the same until job growth is more robust and unemployment levels begin to drop. With historically low interest rates and plentiful inventories, this is an excellent time for buyers to make their move. New buyers, moving up or downsizing - now is a great time to take advantage of great values in the market.

Check back for our next post where we will compare this year with the last 5 years to provide some context of what these numbers mean in comparison to past years.

For more details or to contact us please visit our website www.SpotlightTeam.com or send us an email at jimmyd@kw.com.