“The increase in local unemployment reported this week is sickening,” reports Swamplot’s local financial correspondent. But don’t the latest HAR numbers show Houston home prices at some sort of record high?
Historically, the peak for home prices comes in July or August every year. The increase in the median and average over the past several months has been due to two factors. First, seasonality –summer prices are always the highest. Second, a change in the “product mix” of Houston homes –the % of foreclosed homes has fallen every month for several months straight . . . So the change in the product mix means that the value of any given house probably has not risen, only a change in the product moving through the system is reflected in the numbers.
Is it okay to get excited about the foreclosures, then?
Foreclosed properties made up just 16.8 percent of property sales in June, according to the HAR report. That’s down from 19.9 percent the month earlier. Foreclosures made up more than one third of all sales as recently as January.
Says our correspondent:
. . . This apparent successful absorption of foreclosures is much better than expected. In other cities, foreclosures pile on top of each other with the entire market collapsing under the weight of distressed homes. It looks like we have passed a large number of foreclosed homes through the market process without a big disruption and adverse feedback loop. Some outer subdivisions have the foreclosure rot, but it is not pervasive.
That means everything’s hunky-dory in Houston, then, right?
At the margin, this observer is paying attention to the very guarded language in the press release and in the HAR.com video interview. There is no excitement in the voices of the HAR president and marketing director despite these “record” numbers. This strikes me as a realization that this environment is very transitory and we are a few months away from the next leg down. The clock is ticking on the 2009 summer selling season.