Early Warning Signs of a ‘Double Dipper’?

The National Association of Realtors (NAR) released this article today, showing existing home sales are slowing. In fairness, the analysis we normally look at is the comparison to last year, and sales were actually up 7%, but why report good news if there is a way to make it sound bad? 🙂 While it is too soon to tell for sure, the ‘elephant in the room’ right now in conversations about real estate, is the great question: “Are we headed for a double dip real estate recession?”

With the government having done about everything it knows to do prevent such a thing, the fact is, it’s possible. There aren’t any more ‘magic bullets’ out there for the government to throw at the problem. There is a fair amount of data indicating that the foreclosure problem is NOT over, with close to 15% of mortgages delinquent. There is not another extension for the $8,000 First Time Home Buyers Tax Credit likely. Interest rates are likely to rise this summer.

How will we know? I’ll be looking for the following indicators to tell whether or not Colorado Springs is headed for a double dip housing recession:

  1. The inventory of unsold homes begins to rise, and crosses the 6,000 homes for sale mark (currently at about 4700.
  2. The number of units sold per month in March, April and May are not up at least 20% over last years dismal showing.
  3. Average prices for March, April and May stay flat, showing less than a 3% year to year increase.
  4. The percentage of distressed sales of the total home sales starts trending up from the current 30% level.
  5. The ratio of selling price to asking price starts trending below the average of the past year of over 97%

Is it possible that Colorado Springs could avoid the fate of the rest of the country if we are looking at a ‘double dipper’? Maybe. With some stronger news on the jobs front, some breaks in terms of bringing troops home to Fort Carson from Iraq and Afganistan, Colorado Springs home sales might beat the trend. We’ll be watching!

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