Homeowners Now In Control of Housing Market

Radar Logic and other people are still cranky about the housing market. They opine that the recent strength in national housing price figures won’t last because of something latent lurking out there on the supply side. In statistics, latent variables can be perfectly legitimate — but if it results in perennially brushing aside contradicting observable data, it begins having a legitimacy problem.

There are clearly two trends in the housing market that can be observed directly. One is the significant decline of what some people call transactional inventory and the market share of distressed sales. The other is that home prices are actually rising lately in many areas. I dare to infer that those two trends are highly correlated. I have been seeing things lately about this — like strong statistical correlations between home price trends and low unsold inventory and declining distressed
sales shares


In this context, recent home price stats by Clear Capital, is telling. Not only did they observe the “fourth consecutive month of home price gains” in August 2012, but non-investor home buyers made up an increasing chunk of the sales mix and non-distressed price gains outpaced REO prices. According to Dr. Alex Villacorta, Clear Capital’s research guru, the shift from the investor to the owner-occupied sector “could have a far reaching effect, even in smaller markets.” Nationally, home prices advanced 1.9% over the quarter in August, essentially unchanged from 2.0% in July.

Yearly home price growth also rose to 2.9% in August from a 0.7% annual increase in July 2012. Clear Capital finds that major California areas experienced quarterly and annual home price appreciation in August, that the home price recovery continues to move inland, and that the REO market share in transactions is dropping. I can’t wait to see what the seemingly infinite inference chains of the conspiracy theorist will have to say about that. Ah, I know, it has to do with foreclosure disposition bottlenecks … yawn! Meanwhile, let’s enjoy the rise of the owner-occupied market as the potentially significant event it might be, I dare to infer (until observable facts say otherwise.)