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This was the headline spread across every major news channel yesterday and unfortunately most Americans believed it. Even more unfortunate is the author Dan Levy at Bloomberg News believes it. You see Dan doesn’t know the first thing about real estate, he does not own rental properties and he’s not a real estate investor, builder or REALTOR. He has no hands on experience he’s just some schmuck stuck behind a desk analyzing numbers and trying to make a headline.

What Dan fails to realize and tell you in his article is that U.S. homeowners lost $5.9 Trillion since 2006 peak ON PAPER! Those numbers are according to Zillow.com, which is tracking overall value of homes then versus now. Well if you have not sold your home, you didn’t lose anything did you?

Listen real estate has peaks and valleys, the first investment property I bought dropped from $84k to $56k in the month it took me to fix it up. Guess what I did, I rented it out, I still own it today and in this market it’s worth over $125k. The moral of the story is time heals all in real estate. Those U.S. Homeowners have not lost that money; they simply need to hold on until the market hits its next upswing. Unfortunately deceiving headlines like these blinding some would be buyers from the opportunity of a lifetime.

It’s vital that you realize 80% of the value lost in this country is in California, Arizona, Nevada and Florida. This year Merced CA. lost 37%, Vegas 25%, Myers FL. 21%. If you’re reading this blog I’m guessing you’re not buying in any of those areas.

My point is don’t let this negative media hype distract you from the opportunity in front of you, here in Utah, right now. What I’m seeing gives me every indication that the local and national real estate markets have bottomed and are returning to a more normal trend of appreciation.

Here are four indicators for you to consider:

Pending home sales data : Each month the National Association of Realtors announces the total number of pending home sale contracts. October was the 9^th consecutive month of increasing pending sales, the longest streak on record. This shows real estate demand nationwide increasing off the 2008 lows. As the sales numbers increase supply is decreasing leading to appreciation. It’s economics 101, when demand increases supply falls and the result is appreciation.

New Home Supplies Plummet: October marked the 8^th consecutive month of contraction for new home construction. Currently the supply of new homes fell to its lowest level since 2006. So if supply of new homes is decreasing rapidly and demand for homes is increasing rapidly what happens? Oh yeah, economics 101, less supply and more demand equals price increases.

Existing Home Sales Surge: October was the 7^th consecutive month of increasing existing home sales and October 2009’s sales numbers were 23% higher than 2008’s. We’re now down to a 7 month supply of existing home inventory. Are you noticing a trend?

Federal Housing Agency and Case Schiller Index Show Increasing Values: For the first time since 2007 home values increased between the 2^nd and 3^rd quarter of 2009. Sure this is just one quarter but when considered with the supply and demand improvements outlined above I think it’s fair to say this could be the start of a trend.

Combined, this is a strong indication that the worst is behind us. Take into consideration current 30 year fixed mortgage rates between 4.5% – 5.0%, the lowest this country has ever seen, and this looks a lot like an opportunity of a lifetime. As is always the case, some will recognize the opportunity, take advantage and be very happy they did. Others will do nothing, let pessimism and news headlines get the best of them. But today you can decide, think about where you want to be in five years. My guess is you’ll either be looking back enjoying how dang smart you were and how you saw an opportunity and jumped on it or you’ll be looking back kicking yourself. You saw it, you knew it was there, but you simply did not act.

Copyright © 2009 JLM Industries. All Rights Reserved

When a home seller accepts a contract on an MLS-listed property, the property’s status changes from “Active” to “Pending”.

This means the home is scheduled to sell, but not yet sold.

Each month, the National Association of Realtors® tallies the number of pending homes and publishes the data as the Pending Homes Sales Index report.

In October, for the 9th straight month, the index gained. It’s the longest such streak in Pending Home Sales history.

Because a “pending” home sale is just a contract between buyer and seller, it’s not as important to the economy as actual home sales. However, the Pending Home Sales Index can be a fine predictor of future activity.

Historically, 80 percent of homes under contract “close” within 60 days, and most others close within 120 days. Recent Existing Home Sales data corroborates this. Home sales activity is at its highest pace in nearly 3 years.

The Pending Home Sales Index does have some shortcomings, though:

1. It doesn’t account for newly constructed homes, a small but important part of the real estate market
2. It doesn’t track For Sale By Owner properties and other non-MLS listed homes
3. Its sample set is small, measuring just 20 percent of all MLS-listed sales

Despite this, however, Pending Home Sales is a terrific measure of real estate market strength. Homes are going under contract at a dizzying pace. It’s thinning out home inventory supplies and pressuring prices to rise.

This chain reaction is what makes Pending Home Sales Index worth tracking. As the number of homes under contract increase, home prices can’t be far behind.

This post is a contribution from Steph Noble at the NW Mortgage Group in Portland Or. Steph is one of my favorite bloggers in the Real Estate and Lending world. You can read more of Steph’s postings at http://stephnoble.thewrittenblog.com/

Copyright © 2009 JLM Industries. All Rights Reserved