Existing Home Sales "Slipped" 23.4% 13 comments
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Existing-Homes sales "slipped" some in January, according to the National Association of Realtors [NAR]. The problem, the Realtors point out, is simply that some potential buyers are waiting on sidelines.
Talk about an understatement. The "slippage" the NAR refers to was a 23.4% year-over-year freefall. The term "slip" might not adequately capture the data. Plummet, plunge, nose-dive, crash, tumble or freefall might work. But "Slip?" Gee, that doesn't quite capture the true essence of the data...
Delve beneath the national average into the details, and you find all manner of ugliness.
-Median existing-home price was $201,100 in January, down 4.6% from a year ago (National average)
-Total housing inventory rose 5.5%
-At the end of January, existing homes available for sale were 4.19 million, a 10.3-month supply at the current sales pace (up from a 9.7-month supply in December).
-Single-family home sold at an annual rate of 4.34 million in January. This is 22.4% below January 2007.
-The median existing single-family home price was $198,700 in January, down 5.1% from a year ago.
-Existing condominium and co-op sales dropped 6.5%, and are 30.2% below the year ago levels. The median existing condo price ($220,400) is only 1.0% lower than January 2007.
-Existing-home sales in the Northeast fell 3.6 percent to an annual rate of 810,000 in January, and are 25.7 percent below a year ago. The median price in the Northeast was $270,800, up 3.1 percent from January 2007.
The only good news in the report was found in the Midwest, where sales rose 3.4%, as the median price fell 4.0% ($154,200) from a year ago. Note that this was an area that was largely excluded from the real estate boom.
Existing Home Sales, January 2008
Chart courtesy of Barron's Econoday
Source:
Existing-Homes Sales Slip in January as some Potential Buyers wait on Sidelines
NAR, February 25, 2008
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We had a market driven by the price that someone with no money could buy a house. We are now in a market where the buyer has to have 10% down. Sounds like about a 15% reduction in buyers and prices to me.
However another factor is operating at present. Banks and financial institutions are scared. As an example I went to a major regional bank and offered 2 paid off properties worth 250k as collateral for a loan to buy some RE. They said it wouldnt take a week. Then they put a freeze on and it is 6 weeks later.
Meanwhile I have seen a house that was worth 110k at peak auction for 66k as an example. The scared bank issue will go away in a few months. The reduction in qualified buyers will not. We need a return to lending that utilizes risk management principles and I need a new bank.
How long of a life do you plan to have?
Jack Yetiv
Very good point about median price. Real estate is local. National trends are good to look at, but local trends are more important to look at.
Mr. Praline [John Cleese]: The market hasn't slipped. It's not pining for buyers. It's passed on. This real estate market is no more. It has ceased to be. It's expired and gone to meet its maker. This is a late real estate market. It's a stiff. Bereft of life, it rests in peace. If you hadn't nailed it to the foundation, it would be pushing up the daisies. It's rung down the curtain and joined the choir invisible. THIS IS AN EX-real estate market.