Wall Street grabbed the headlines again this week, but the print was a lot smaller. Volatility still ruled and there were some crazy days, but the general trend was positive, and the Dow gained back about a third of its losses from the wild week that preceded it.
NAR noted a little softening of price increases although homes in metro areas are still setting new records. Also, if your appraiser says you got a bargain, believe her.
When we wrapped up the week’s report last Thursday morning, it seemed the wild ride on Wall Street might have run out of gas. After all, the previous week had seen the seventh largest drop in Dow Jones history, and then THE largest one ever, 1,175 points. Before the day was out however, the market scored a new second-place loss, plunging another 1,022 points. All told, from the time the market closed at an all-time high of 26,616.71 points on January 26 through that heart-stopping February 9 drop, the index lost 2,756 points.
Despite some crazy intraday gyrations, this past week has been a comparatively tame one. As of the market close on Wednesday, the Dow had reclaimed 900 points. Experts say we should expect more volatility, and that tendency may be stoked by Wednesday’s report on consumer prices which point to increased inflation and uncertainty.
Home prices might be slowly losing a bit of their volatility. Lawrence Yun, chief economist for National Association of Realtors (NAR) noted the fourth quarter existing home sales report showed a slight softening of price increases; a year-over-year gain of 5.3% compared to 5.6% in the third quarter. Yun however also noted that an uptick in sales further tightened the inventory of existing homes. The 1.48 million homes for sale at the end of the quarter was 10.3% fewer than a year earlier.
Unlike NAR’s monthly existing home report, its quarterly one focuses more on sales and prices in metro areas. Of the 177 areas NAR tracks, prices were up in 162 of them, with double digit increases in 26 and 114 of them now at all-time highs.
Speaking of Home Prices
A pre-purchase appraisal can only have one of three results; it can match the purchase price or come in higher or lower. When it doesn’t match, borrowers often ask themselves if they overpaid, or alternatively, got a bargain.
CoreLogic looked at California houses that were bought after 2010 and then resold after being held for at least 18 months. They found those homes with an initial appraisal above the purchase price appreciated at a higher rate--an average of 3.3%--than the market as a whole. Those with close appraisals saw price gains in line with the local market, while homes with lower appraisals didn’t keep pace with the market. It wasn’t a bad shortfall, however, only 0.3%.
The bottom line? Be happy if you got a bargain, don’t worry if you didn’t, and appraisers seem to really know their stuff.
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