Has Housing Reached the Bottom?
Type the title of this blog post, ‘Has Housing Reached the Bottom,’ into Google and you’ll get approximately 20 million results. This is not terribly surprising, given that housing has been accused — rightly or wrongly — of being the primary cause for the 2008-09 recession and the subsequent mild recovery we still find ourselves in. Economists, real-estate experts, politicians and journalists have been searching for signs that the housing market might be rebounding since the recession began, but if we’re honest with ourselves, we’ll admit that those signs are hard to come by. Still, we occasionally get some hopeful news. Take the national housing starts number from earlier this week, for example. The 717,000 housing units started in April were higher than anticipated. This figure is also up by about 30 percent from one year ago.
Source: U.S. Department of Commerce; Census Bureau
Are we seeing these national increases here in Kansas City? In lieu of comparable housing start data for the Kansas City area we looked at home sales and sales prices to look for signs that the local housing market may be picking up.
According to data from the Kansas City Regional Association of Realtors, home sales do appear to be trending up. The chart below shows the year-over-year change in home sales by month. We would have to go all the way back to June 2011 to find a month where the number of home sales did not increase over the previous year. This past March, for instance, there were 2,158 homes sold in the Kansas City area. This figure is up by 274 from March 2011.
Source: Kansas City Regional Association of Realtors
In addition to the number of units sold, sale prices are also increasing. In March, the average sale price for a home in the region was $156,945, up from $149,984 one year earlier.
So, to answer the question we posed in the title, yes, the housing market probably has reached bottom. We can expect to see continued moderate increases in sales, housing starts and in sale prices as the economy continues to recover. But is important to keep in mind that the housing market is still a long way away from the boom times we experienced in the mid-2000’s. That April number of 717,000 national housing starts would have been about half of a typical month in 2007. We may not see the housing market get that hot again for quite a while.