Earlier this month, there was more news that, for the fourth straight month, existing home sales were up nationally from the previous year’s levels. What is the reason? A lot of this uptick is due to the tax credit of the Spring of 2010 where sales were borrowed from the second half of 2010. This made this Falls’ results more realistic.

The latest report from the National Association of Realtors shows sales of existing homes up 13.5 percent to a seasonally adjusted annual rate of 4.97 million houses in October. I am also hearing from around the country that the upper end is starting to move, especially in the second- home markets. As I stated many times, real estate is a local game. This is good news if it is systemic growth.

Last October was the bottom. With four straight months of 2011 growth, this doesn’t mean that we are on another boom course, but rather a gentle recovery over time.

What was interesting was that of October’s national sales, 28% were cash. The wealthy recognize that the bottom has passed and the time to strike is now.  In addition, 18% were investors and 34 percent of the purchases were first-time homebuyers. The larger percentage of first-time homebuyers makes sense because of prices, interest rates and the fact that rental rates are the highest ever.

An interesting side note is that, of all closings, 28 percent were on distressed properties, which is exactly why price compaction is with us today and will most likely be with us for the next 12 months or so.

Another statistic that struck me was the fallout rate of 33 percent, which is way up from a normalized 18 percent.  Buyers need to have their finances in order and paperwork buttoned up.  Sellers need to understand appraisal values before pricing their house, and buyers need to understand appraisal value before making offers, and that is where a trusted real estate advisor comes in handy.

Is the worst over?  I think so, but that is one man’s opinion.  They say birth rates are down (the lowest in the country since 1999) but then again, life expectancy used to be 54, and today it is 79.

Unsold inventory is down nationally 2.2 percent which is another positive sign.  With an election year in 2012, low interest rates, a shrinking inventory and additional price compaction, now really is the time to buy!

By Pat Riley (President and Chief Operating Officer)