Predicting Home Sales Using a Familiar Rule of Thumb

Predicting Mecosta Home Sales Using a Familiar Rule of Thumb

The volume of home sales this fall will depend on more than just the number and quality of listings — though they do seem to be stacking up fairly well.  Predictions are always less than reliable, but when a major benchmark is met for real estate activity on the national scene, it can be a pretty convincing indicator.

In any case, it’s useful to take into account a wide variety of sources.  They help you sniff out the reasons why home sales ought to surge (like low interest rates, today’s situation) or why home sales ought to fall (like an economic recession, thankfully not our current situation).

So a recent Wall Street Journal’s headliner about new home sales came as red meat for local would-be real estate seers.  “Sales of New Homes Surge to Highest Level Since ‘08,” read the headline in a story (it was right below “Student-Loan Defaults Drop;” itself another good sign).  The “surge” story was calling attention to the latest Commerce Department announcement that new home sales climbed 18% in August, “the biggest one-month jump since 1992” and “the highest level of sales since May 2008…”

That last date is an eye-catcher, since the U.S. was then in a recession (actually, I think we could safely call it “THE” recession).  Economists have been going back and forth for at least the past four years about whether the slow recovery was strong enough to stimulate the housing sector; or whether it was the other way around — or even whether the recovery was even truly a recovery.

The WSJ story dealt specifically with a surge in new home activity, which, since that comprises only about 10% of the market, could be a reason to ignore its value as a gauge. But that would be to overlook some extra information buried in paragraph #3 pointing out that “home builder optimism this month reached the highest level since 2005.”

That means rising new home starts. The builders are pulling out their hammers and saws.

Why is that so important?  Take any headline-grabbing Wall Street or political scandal as an indicator.  As the scandal begins to unravel, sooner or later some pundit will intone the irrefutable rule of thumb advice for how to uncover who or what was behind all the mischief: “Follow the money!

When the big new home builders start pulling out their wallets and breaking ground, the money (smart or otherwise) is pointing in the direction that augurs well for the whole of real estate activity.  If you have been waiting for that kind of activity to embark on your own home selling or buying project, it means that this fall your wait may be over.  Give me a call to get more specifics about where your plans could fit into today’s  Mecosta County home sales picture!

Terry Reeves

 

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Terry Reeves

Terry Reeves

Real Estate Professional
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