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Are Home Improvers Preparing to Sell?

Lowe’s strong fourth-quarter results gives experts more reason to believe that the housing market will show some bounce in the spring.

The world’s second-largest home improvement store’s results this morning were better than most analysts’ expectations and come on the back of Home Depot’s $16 billion-strong fourth-quarter sales, which were reported last week. Lowe’s announced a 13% spike in sales to $11.63 billion helped by an unusually mild winter and better cost control. Although Lowe’s is playing catch-up on Home Depot, same-store sales rose 3.4%, a significant improvement on the third quarter’s 0.7% rise. A spokeswoman for Lowe’s says there was particular strength in weather-related items like fencing, builders hardware and outdoor lighting.

The double-digit sales increase in Lowe’s other perennials like kitchen and bathroom cabinets, and new flooring shows that homeowners are feeling more confident about the housing market and may be eying the spring as a time to fluff-and-sell, analysts say. “Housing and mortgage rates are at all-time affordable levels,” says Susan M. Wachter, professor of real estate and finance at Wharton University of Pennsylvania. She says confidence is finally returning to the housing market: “We can watch for this in spring 2012.”

Experts say there are other signs that home sales may recover. “The pricing of mortgage-backed securities is picking up, a reflection of a fundamental strengthening in the housing market,” Wachter says. The recent growth in employment will also help reduce foreclosures and prevent a glut of cheap houses on the market, she says: “These are signs that the confidence crisis hindering potential home buyers can turn around in the coming months.”

Plus, existing home sales figures for January released last week reached a two-year high, according to the National Association of Realtors. They jumped 4.3% in January from a month earlier to a seasonally adjusted annual rate of 4.57 million. Lawrence Yun, NAR chief economist, sees this as evidence that the market may be bottoming out after the 2008 housing market collapse.

That said, not everyone who buys new kitchens and bathrooms are intending to sell right away, experts say. David Abuaf, chief investment officer at Hefty Wealth Partners in Auburn, Ind., says people splurging on their homes may be planning to stay – not leave. But he says it’s a longer term sign of economic recovery. “These numbers indicate that consumers are more confident and spending more,” he says. “Homes will start coming to market in the next few quarters to test what the market is willing to pay. It’s more important as a larger bellwether to the US economy than just real-estate.”


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    • Scott,Thanks for the heads up. The other issue with sharebuilder is that it would still chagre you $4/trade..What I would really want to see is a stock broker that lets you open a retirement account without charging you any annual fees or stock commissions.

    • As houses get older they need more maintenance.

      We usually moved every 8 years or so to a new house to avoid repairs and renovating. This time. we are staying put and spent 30k in the last year on our 10 year old home.

      Over then next 5 years I plan to spend another 50k. When I am done, I will be lucky if my house is worth 10% more than what I paid for it, but I will be comfortable and my house will be easier to sell than any of the 1990′s time capsules owned by people who never put a dime into their home.

    • In the Baltimore (County and City), Maryland area we are experiencing low inventory in popular locations. I agree that there is still an excess amount of housing but Unrealistic Expectations of pricing which is the largest factor in the quantity of homes on the market. Not only is Baltimore seeing low inventory but multiple offer sales. There are promising signs of economic improvement that are taking place but we are still a ways off.

    • There is already a surplus of homes for sale, which is the problem. How is an increase in homes being put up for sale, at a time when there are no buyers, going to help the economy? More realistically, these people are being forced to maintain the homes that they are stuck with, as opposed to in the past, when they would just have moved without fixing anything. Another possibility is a large number of homes being fixed up by investors in hopes of renting out the properties. But because of the excess even in rental properties, this speculation will only lead to another housing bubble in a year or two once these investors are unable to keep up with payments on their empty properties because there are no renters.

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