Foreclosures have been dropping steadily, and the housing market appears to be recovering. But investors are suddenly jumping ship; what does this mean — to homeowners, the housing market, and the economy?
What The Housing Market Looks Like Now
In the latest report from S&P/Case-Shiller (a leading industry index) the readings showed that home prices in June were up, not only nationally, but across the top twenty metro areas. S&P’s David Blitzer says, “I think this is a very clear sign we’ve turned around.”
Although the summer months are usually stronger in the housing sector, the report shows not only month-over-month growth, but year-over-year growth as well. Partly responsible for that growth has been the supply of homes. Inventory in July (the number of homes on the market) was down 24% from a year ago. Investor activity — at a 2-year peak in May 2012 at 25.3% — dropped all the way to 21.9% in July.
What Does the Change in Investor Activity Mean?
Some people refer to investors as ‘canaries in a coal mine,’ whose hesitance can be taken as an early warning sign, especially in these cautious days. But in a recent HousingPulse survey of realtors across the country, they see no cause for alarm. An agent in California says, “Investors are dropping out due to the increase in prices.”
With foreclosures down 14% from last year as banks explore other options with their loanees, perhaps the answer is merely that investors can no longer get the bargain basement prices they’d become used to.
Still, cautious analysts assert that we don’t have enough information to know for sure. Since the housing crash was so unprecedented, there’s no way to say for sure what the recovery will look like, and whether customary indicators will be of any use. Time is the only way to tell what this slump in investor activity will mean for the housing sector.
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