The debate is heating up on how fast the economy will recover. Some experts point to a long road of mediocre activity before we will see growth. How long that road will be depends heavily on how quick the housing market stabilizes.
A glut of foreclosures are keeping the supply of homes ahead of the demand. A recent report from First American Core Logic cited the supply of available homes at 3.8 million in September 2009, down from 4.7 million a year earlier. That’s a good sign on the surface, but the report also shows that the pending supply has increased significantly from 1.1 million a year ago to 1.7 million in September 2009. The pending supply, also referred to as the “shadow” inventory, estimates the number of properties owned by banks and more than 90 days delinquent. The two measures combine to measure the total supply. At current sales rates, it will take 11.1 months to clear that inventory. The only thing that can shorten that time is an increase in home buyer demand. One place to look for an indicator of home buyer demand levels might be the number of consumers visiting online real estate search engines.
Homes.com, a leading online consumer real estate destination, likes what it sees so far in January. “We typically see a fall off in traffic during the fourth quarter as families get settled into the school year and prepare for the holidays, but that didn’t happen this year” says Jason Doyle, Vice President of Homes.com. “Rather, our traffic continued to climb during the fourth quarter leading to record annual traffic levels in 2009. As a result, we weren’t sure if we would see the typical traffic spike that usually follows the holidays and new year.”
Much to their surprise, the spike is happening on a level they’ve never seen before. “So far, traffic to Homes.com in January is 75% higher than last January and we’re seeing continued day-to-day increases. We’ve set seven single day traffic records through the first nineteen days and every day this month has exceeded our highest single traffic day in all of 2009, says Doyle.
Online home search sites like Homes.com attract consumers early on in the home buying process at what Doyle calls the initial research and awareness phase. “Typically users on Homes.com will buy four to nine months later. They’ll start doing research on neutral search sites like Homes.com before connecting with a broker or agent to take them into the shopping phase”
Historically low interest rates and the extension of the Homebuyer Tax Credit by the U.S. Congress until April 30, 2010 are giving consumers that might not otherwise be shopping for a home an incentive to do so. Events leading up to that April deadline should be interesting.