REPOST: Housing Market Blows Hot and Cold

 Is the endless snow affecting the housing market? This article from Bloomberg View explains the seasonal trends in housing sales.

THIS ONE HAS GREAT CURB APPEAL. | Image Source: bloombergview.com

The northern third of the U.S. is locked in a straitjacket of snow, ice and bleak weather better suited to staying at home than going out and hunting for a new one. I can almost hear it now: Remember how awful last year’s polar vortex was for the fledgling housing-market recovery? Looks like we're in for more of the same this year.

Except that this construct reflects a significant misunderstanding about the practical nature of housing sales. Homebuyers who decide not to view property during a bout of cold weather don't drop out of the market. They just delay their search until the weather becomes more agreeable, usually in a few weeks or months at most.

Consider the chart below, which uses the average temperature of the 48 contiguous states from the National Oceanic and Atmospheric Administration and the number of non-seasonally adjusted existing home sales from the National Association of Realtors. Notice anything? The seasonal trends are remarkably in sync: Housing sales rise in warm weather and fall in cold weather no matter the availability of credit, what direction interest rates are moving or the extent of wage and job growth.

Image Source: bloombergview.com

The reality is that housing sales are seasonal -- always have been, always will be.

Here's where things can get confusing, though.

Most national housing studies, such as those by the NAR, emphasize a month-over-month analysis of seasonally adjusted numbers. Throw in a federal housing-stimulus plan or a change in housing tax policy and those seasonal adjustments distort the market trends.

Other reports, such those by S&P/Case Shiller and CoreLogic, are based on a methodology that essentially strips away seasonal trends. That's a key reason those reports feel out of step with actual market patterns. 

Over the years I’ve had conversations with a number of well-respected economists about the virtues of their seasonal-adjustment methodologies. Yet consumers and real-estate brokers have a very different perspective and see the housing market as a series of “waves.” That probably is a more accurate representation of what's going on.

And that’s pretty cool.

Learn more about the US housing market by following this Galloway Custom Homes Google+ page.

Four easy, inexpensive ways to add value to a home

The housing market might be a little unpredictable, but selling a house during these difficult economic times isn’t impossible. Homeowners wishing to sell now or those who are renovating in preparation for a future sale have a bevy of options to improve and increase the value of their homes without spending a fortune. A little creativity and some elbow grease will attract the real estate profits. The following, in no particular order, are five home improvement projects that can leverage a house's resale value.  

1. Create space

Image Source: jcress.com

If the house has small rooms, knocking down a non-structural wall or two can create the illusion of space. Many buyers prefer open-plan homes that ease the flow of foot traffic, make it easier to entertain guests, and provide them with the flexibility of designing rooms exactly the way they want. Open-plan kitchens are great for young families, too: parents can watch the kids while they're preparing meals.  

2. Use the power of paint

Image Source: pbstudiopro.com

A fresh coat of paint indoors and outdoors improves a home's appearance and adds instant value. It's also inexpensive, especially when compared to the costs of replacing faded wallpaper. White, neutrals, and pastels can make a small room look bigger, and bright hues create the illusion of light.

3. Add some curb appeal

Image Source: suiteexchange.com

Trees, flowers, and plants prettify home exterior. Research says that these trimmings add real value to property, but when landscaping for curb appeal, homeowners should consider their target market and the type of house they have. A formal garden with rows of perfectly manicured trees would look odd with a rustic log cabin, while a profusion of flowers and climbing vines can make a stately Georgian home look unruly and rundown.  

4. Add eco-friendly features

Image Source: telegraph.co.uk

Results from research conducted by the National Association of Realtors show that an average of nine out of 10 recent home buyers considered energy costs as an important factor when choosing a home for purchase. Simple changes, like updating old window panes with low-e glazing, installing a timer for the water heater, and insulation can increase a house's value, especially in the eyes of eco-conscious buyers.  

Tom Galloway of Muskegon is the founder of Galloway Custom Homes, a leading custom home builder that specializes in high-quality, energy-efficient homes. For discussions on home renovation projects, like this Facebook page.