Let me be perfectly clear …

Posted by Mark Chapman on July 30th, 2012 at 2:38 am

Dane Hahn

Richard Nixon used to say, “Let me be per­fectly clear about this…” And so I won­der about the clar­ity in a release that came across my desk this week: Recent data indi­cate a slow­down in eco­nomic activ­ity for the remain­der of 2012, yet mod­est growth is still expected, accord­ing to Fan­nie Mae’s Eco­nomic & Strate­gic Research Group. What?

Con­sumer spend­ing has weak­ened in recent months as the con­sumer con­fi­dence index fell to the low­est level since Jan­u­ary. Con­tribut­ing to the down­turn is an uncer­tain job mar­ket. The June employ­ment report showed sig­nif­i­cantly fewer hires com­pared to the first quar­ter monthly aver­age, and ongo­ing con­cern regard­ing the Euro­pean debt cri­sis and domes­tic finan­cial mar­kets may sup­press a mean­ing­ful increase in pri­vate pay­rolls before the end of the year. In light of these trends, the group has revised down the 2012 gross domes­tic prod­uct (GDP) growth pro­jec­tion from 2.2 per­cent to 2.0 percent.

“The data from the past month col­lec­tively point to decel­er­at­ing eco­nomic growth, but growth nonethe­less,” says Fan­nie Mae Chief Econ­o­mist Doug Dun­can. “It’s now clear that our con­cerns have mate­ri­al­ized, push­ing down our already mod­est growth projections.”

Pend­ing home sales declined in June from May, The Pend­ing Home Sales Index (PHSI), a forward-looking indi­ca­tor based on con­tract sign­ings, slipped 1.4 per­cent to 99.3 in June from a down­wardly revised 100.7 in May – but it’s 9.5 per­cent higher than June 2011 when it was 90.7. The data reflect con­tracts but not closings.

Fore­clo­sure activ­ity in the first half of 2012 increased from the pre­vi­ous six months in 125 of the nation’s 212 met­ro­pol­i­tan areas with a pop­u­la­tion of 200,000 or more.

Florida accounted for four of the top 20 metro fore­clo­sure rates. Florida cities in the top 20 include Orlando (No.12), Miami (No. 13), Cape Coral (No.17) and Lake­land (No. 18). In gaug­ing change between the last half of 2011 and the first half of 2012, the Tampa-St. Petersburg-Clearwater area had the high­est fore­clo­sure increase at 47 percent.

Buyer inter­est remains strong, but fewer home list­ings mean fewer con­tract sign­ing oppor­tu­ni­ties. National Asso­ci­a­tion of Real­tors indi­cated that we’ve been see­ing a steady decline in the level of hous­ing inven­tory, which is most pro­nounced in the lower price ranges pop­u­lar with first-time buy­ers and investors.”

Res­i­den­tial invest­ment is expected to increase this year but from a very low base, and is expected to con­tribute to eco­nomic growth for the first time since 2005. Accord­ing to Fan­nie Mae’s June 2012 National Hous­ing Sur­vey, home­own­ers are show­ing greater con­fi­dence in one-year-ahead home price expec­ta­tions, and their broad atti­tudes regard­ing the hous­ing mar­ket con­tinue to improve.

The share of polled con­sumers who say they would buy a home if they were going to move increased by 6 per­cent­age points to the high­est level seen in the survey’s two-year his­tory. This is likely due in part to low inter­est rates and the assump­tion that home prices have hit bottom.

So the one hand, things are not all that good, but then on the other, things are get­ting bet­ter, albeit slowly. I would add that in this sit­u­a­tion, if you can — now is a good time to buy a house. Is that per­fectly clear?

Dane Hahn is a real estate pro­fes­sional, prac­tic­ing in Engle­wood. You can reach him at 941−681−0312, or by email at dane.hahn@gmail.com. See him on the net at www.danesellsflorida.com.

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