What is the Market Doing

I would rather see investing in real estate be diversified however, the principle of the "three L’s" of real estate – location, location, location - has never been more proven than in today’s market. While existing home sales in some regions of our country declined in May, other areas are starting to boom. Here are some stats from the National Association of Realtors (NAR) for end-of-month figures comparing April to May:

• Northeast – down 2.5%
• Midwest – dropped 6.4% due to flooding
• South – down 5.1%
• West – unchanged

A couple reasons for the declines are unseasonably bad weather, which slows buyer shopping, and restrictive loan underwriting standards regulated by the government.

Still, there are oases in the desert. According to the NAR, “Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas.”

Most notable, according to USA Today, is the Silicon Valley in California. In Palo Alto, California, home prices jumped 20% in May. Why? It’s located in a job rich center for technology. Along with that, there are reported to be up to 30 companies in line to go to IPOs in the next 12 months. The market in this area is predicted to grow quickly for the next two years.

Other indicators point to an upswing in real estate nationwide. As prices decline, buyers recognize great bargains and sales stabilize.