Anyone can live with these types of headlines. The other kind - like those about mortgage approvals being hard to get, price declines, foreclosures - have been dominant for too long. Yes, the positive ones give consumers a dose of optimism that the housing market isn't dead after all. That it has the capacity to work thorough its imbalances and eventually start on the road to recovery.
Let's throw in some interesting stats. First American CoreLogic put together a bunch of numbers on home sales at ZIP codes in metropolitan areas with at least 10,000 households. Each city only got one ZIP included in the final ranking.
The best performer in this study was Fairfield, CA, where sales climbed 226% in the fourth quarter of 2008 compared with the same time period the year before. That's impressive. In fact, California dominated the top ten of the list with eight spots. Moreover, Arizona, California, Florida and Nevada, the most-ravaged states in this real estate downturn, easily ruled the entire field among the first 25 slots. Las Vegas, NV, came in 15th for ZIP 89131 where sales grew 27% for the fourth quarter.
As expected, the number one catalyst for this encouraging sales increase is the steep drop in prices. The states that led the way to the bubble's peak are now seeing their prices plummet the most, descending toward a plateau where people feel comfortable to operate again. That's how they are showing the most gains.
Low prices have drawn cash-heavy investors and eager first-time buyers, energized by today's affordable mortgage rates, to pick and choose from listings consisting mostly of bank REOs. The main thing is that the still high inventory is being burned up, that the demand side is building at least some momentum. It is crucial to a lasting turnaround.