Reading the front page of last Sunday’s Inquirer regarding the resurging real estate market did you assume that your Nether Providence home was suddenly worth 55% more? This was the increase in the median price of homes sold in the township when comparing the first quarter of 2012 to 2013, as reported in Sunday’s Inquirer.

The percentage increase is indeed true, but if the underlying numbers are analyzed the picture is not quite as bright as portrayed. I contacted Alan J. Heavens of the Inquirer and summarized my analysis:

During the 1st quarter of 2012 there were 6 sales that were recorded at $100,000 or lower with the lowest at $41,500. This group represented 23% of the total quarter’s sales. Traditionally this under $100,000 price range constitutes 2% to3% of the Nether Providence market. On the high side for the 1st quarter of 2012, the highest sale came in at $545,000.

Turning to the 1st quarter of this year, there were no sales under $100,000, but 3 sales that were over $660,000, with the highest at $750,000. Again this was some very unusual activity for a small segment of a market whose core is in the $250,000 to $350,000 price range.

This hyperactivity at the low end in 2012 and the high end in 2013 has led to a skewing of the data. While there are encouraging signs of a recovery, the market needs to exhibit a continued string of performance in key indicators such as selling price to original and last price ratios, and a consistent month over month increase in both average and median selling prices, that so far has been elusive. Buyers are still getting seller concessions on a regular basis – 10 of 19 homes sold in Nether Providence in May 2013 had a seller concession, which indicates to me that buyer are still in control.

Mr. Heavens did respond to my Email with “The decision to use the data in that way was not mine, nor, as is usual, were my objections heeded.”

I appreciate his objectivity.

Wallingford PA Real Estate – Wallingford, PA 19086

Boomerang Buyers Are Looking To Become Homeowners Again

Boomerang buyer is another new term that has recently become part of real estate terminology. A “boomerang buyer” describes people who have lost their home to a foreclosure or short sale during the housing bust of the last several years, and are seeking to become home owners once again. Since 2007 an estimated 4.7 home owners are estimated to have lost homes through foreclosure, and this group could be an import future pool of buyers

Foreclosure does have a big impact on a person’s credit score, but if consumers are diligent about repairing their credit, they can look at becoming buyers after waiting two to seven years, depending on their financial standing. The FHA wait is three years for either one.

Boomerang buyers are most prevalent in areas such as California and Arizona that were hardest hit by foreclosures, and their return is contributing to rebounds in those markets. Going forward, growing numbers of boomerang buyers could help offset the expected slackening in demand from investors as home prices rise.

With the start of the housing bust now six years past, this will be the first big year for this buyers returning to the market, accounting for 10% of home sales, up from 4% last year. Boomerang buyers are expected to stay at that level until starting to subside in 2016, about eight years after the height of the foreclosure crisis.

Taking a look at Southern California and across the Southwest, almost 14% of new home sales in the last half of 2012 were to boomerang buyers. That compares with less than 5% of new home buyers in the Northeast, Southeast and Northwest.

Most of these reentrant buyers are expected to get loans from the Federal Housing Administration, which requires just 3.5% down payments vs. 20% for many conventional loans, and borrowers can also have less than stellar credit.

Even after the financial wreckage and emotional strain of a short sale or foreclosure, boomerang buyers say they’re driven to own for the same reasons they bought before. They want their own place. They see it as a good investment as prices have dropped since their last foray into home ownership.

The rent versus own equation is also driving home ownership. Nationwide, buying a home is now 44% cheaper than renting in 100 leading metros, as data from Trulia indicates. Trulia also estimates that rents have increased 8.3% in the past two and a half years.

The desire for home ownership remains strong and boomerang buyers are evidence of that.

Wallingford PA Real Estate – Wallingford, PA 19086