Is anyone else feeling dizzy from the housing market reports this summer? One day, we hear that the housing market is recovering. The next day, we hear that the market is stumbling. It’s nearly impossible to keep up with the news, let alone identify any sustainable trends.
Having seen real estate go up and down for years, I’ve come to the conclusion that the housing market is going to do what it wants to do and there is little we can do to change it. We can keep an eye on it and hope for the best. We can work our butts off to get homes sold and purchased. But, we cannot snap our fingers and redirect its course. For this reason, I do not believe we should be preoccupied with the day to day fluctuations. I do believe, however, that there are three things that every HR person should know about the market today:
Housing markets are region specific. Reports that the national housing market is up or down are great for sensational news articles and macro-level analysis, but they have little to do with what sellers and buyers will actually face in real-time. Housing market fluctuations are region specific. In some parts of the country, home sales might be picking up. Other areas may not be as fortunate. For this reason, relocation managers and transferees should only consider the origin and destination markets when developing home marketing strategies.
Home sale activity in the summer is misleading. Despite the fact that recent reports have suggested that the housing market overall is bouncing back, I’m going to reserve judgment until we see what happens in the third and fourth quarters. I don’t want to be a downer, but it’s important to keep in mind that summertime is THE season for home sale. Homeowners typically sell in the early spring so that they can purchase in the early summer and get their children acclimated to the new location in time for the beginning of the school year. As potential home buyers approach the end of the summer, especially in a desirable school system, available inventory starts to get bought up. While any uptick in sales is a good thing, it’s important to keep it in perspective. Summer sales reports are hardly indicative of a sustainable upward trend, so it’s never wise to adjust policy or marketing periods based on summer data.
Shadow inventory is a reality. There is still a large shadow inventory looming over the housing market. While this is also region sensitive, it’s good to be aware of what the banks are up to. Shadow inventory are the bank-owned properties that will hit the market when the banks decide the inventory of comparable properties has fallen enough to release more. Further, there are homes that the bank is not yet willing to release on to the market because the amount of the loan on the property exceeds the value of the home. The banks will not want to record the loss, so they will hold off putting the home back on the market until property values rise. Regions that have seen a lot of foreclosures will have more shadow inventory and a saturated market for a longer period of time.
What do you think people should know about the housing market today? Please share below.