Is this the “Bottom” for the Housing Market?

The National Association of Realtors (NAR) released April pending home sales numbers which showed a rise of 6.3% from March, a the highest reading since October 2007. Sales are still well below April 2007.

But if you read NAR’s press release you might not even know that this was the worst housing market in decades.

In fact, things sound pretty rosy.

Lawrence Yun, NAR chief economist, said pending sales contracts have picked up notably in areas undergoing significant price drops.

“Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it’s unclear if they are investors or owner-occupants,” he said.

“Sharp price reductions are leading to a quicker discovery of price equilibrium points. The West is already seeing year-over-year gains in pending contracts.”

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the market may be breaking its holding pattern.

“It appears that more buyers are realizing they can take advantage of a favorable combination of mortgage interest rates, home prices and family income,” he said.

“Overall affordability conditions are the best we’ve seen since the middle of the housing boom in 2004, but with far more choices and much less pressure than buyers experienced four years ago to make an investment in their future. Recent declines in mortgage rates on conforming jumbo loans and a return to sound but not overly stringent underwriting standards will permit more people to qualify for a loan.”

Yun said the underlying fundamentals point to a pent-up demand.

“Home sales are at about the same level as they were 10 years ago, yet the population has grown by 25 million people and we have over 10 million more jobs,” he said.

“The housing market has been underperforming by historical standards, partly because buyers were hampered by mortgage availability issues, but that’s improved and an upturn is more likely. On the other hand, it’s unclear what role consumer confidence will play in the coming months.”

And, see, things are even “picking up” in horrible markets like Detroit and Las Vegas. The end MUST be near.

“We’re seeing healthy price gains in moderately priced areas like Erie, Pa., and Corpus Christi, Texas, and double-digit gains in others,” Yun said. “Our most recent data shows sales rising strongly from a year ago in some areas that experienced sharp price drops, including Detroit and Las Vegas.”

Yes- sales are up. But they’re up because buyers ARE being practical. The banks are listing the foreclosures for pretty attractive prices (especially compared to recent years.)

If you live in San Diego and saw small cottage houses selling for $600,000 that are now priced at $300,000- you would have thought you had died and gone to heaven too.

It IS all about affordability. Sales will increase if people actually have the income to buy the property (with a downpayment.)

What NAR isn’t saying is that many of these “sales” are in the foreclosures. The regular properties on the market at 2005 prices aren’t selling. These homes are what are piling up in inventory around the country.

Is this the bottom? Not even close.

I know it’s NAR’s job to rah-rah about real estate. That’s their market.

But they’ve been saying for awhile that this was the bottom. But like the decline of the Nasdaq, when the market hits the bottom, no one will be announcing that it finally made it there.

It will happen quietly. With no one paying any attention.