Housing Market Tracker - Prices Finally Low Enough for Buyers?

Quote of the Day

“I would not read too deeply into a single month's data.” - Lawrence Yun, the National Realtors Association's chief economist, on the unexpected rise in existing home sales this month. Yun predicts sales will improve in H2’08. (Bloomberg, Mar. 24th)

House Sales and Price Data

Wave of Foreclosures Drives Prices Lower, Lures Buyers. “A glut of foreclosed homes of historic proportions is starting to drive down U.S. home prices faster as lenders put more properties on the market and buyers show signs of interest… The oversupply is severe: In some major markets, including Las Vegas and San Diego, foreclosure-related sales have accounted for more than 40% of all sales in recent months. New data suggests that pressures like these are starting to drive prices low enough to attract some buyers back into the market. On Monday, the National Association of Realtors said sales of previously occupied homes jumped 2.9% in February from the month before.” (Wall St. Journal, Mar. 25th)

Existing Home Sales in U.S. Unexpectedly Rose in February. “NAR: Sales of existing homes in the U.S. unexpectedly rose in February for the first time in seven months, easing concern credit restrictions and falling prices would hurt demand. Purchases increased 2.9% to an annual rate of 5.03 million. The median home price dropped 8.2% from February 2007, the most in four decades of record keeping… Economists had forecast existing home sales would decline to a 4.85 million pace for February… The decline in the median sales price was the biggest since those records began in 1968. The value dropped to $195,900 from February 2007.” (Bloomberg, Mar. 24th)

February Existing Home Sales Fell 23.8%. “Today's fictional headline: National Association of Realtors: "Sales of existing homes increased in February and remain within a fairly stable range."Why is this fictional? Changes from January to February are measuring seasonal differences, not actual improvements. Y/o/y changes showed that single family home sales were 23.8% below February 2007 levels... Single-family home sales decreased 22.9%, while the median existing single-family home price was $193,900 in February, down 8.7% from year ago prices. The best news… was the 3% decrease in total housing inventory. At the end of February, there were 4.03 million homes for sale -- a 9.6-month supply.” (Barry Ritholtz in Seeking Alpha, Mar. 24th)

With Economy Tied to Wall St., New York Braces for Job Cuts. “New York City: Some prospective buyers in the pricey condominium market have put their plans on hold… Last month, broker Shai Shustik [stopped searching for] a $700,000 one-bedroom apartment on Manhattan’s East Side… [after his] client’s… father said he had lost too much money in the stock market to buy [it]… A Credit Suisse banker who wanted to spend up to $1.6 million for a 1BR apartment… abruptly stopped his apartment search because he was too concerned about the stock market and his future bonus potential.” (NY Times, Mar. 24th)

Local Housing Market Expected To Rebound. “Central West Tennessee Association of Realtors/MLS: The inventory of homes on the market in Jackson… measured at 12.6 months in December… On Feb. 29, inventory had fallen to 7.6 months … In Jackson and Madison County... 291 homes sold this year through Feb. 29, a 21% decrease from the 368 homes sold in Jan.-Feb. 2007… Homeowners in Jackson waited an average of 106 days to sell their homes during Jan.-Feb. 2008; an increase of 19 days from Jan.-Feb. 2007… The average price for a Jackson home during Jan.-Feb. 2008 was down more than $25,000 from Jan.-Feb. 2006 to $106,131 from $131,294.” (Jackson Sun, Mar. 24th)

Parts of County See Significant Home Price Drops, While Others Keep Rising. Maryland: “Metropolitan Regional Information Systems: Home prices dropped in more than a dozen Anne Arundel County ZIP codes last month compared to February 2007... Lothian, a rural south county area, saw a 63% decline from $482,500 to $177,500 last month… Davidsonville, [jumped] 121%. Jessup in west county saw… a 29% fall in prices from $247,500 in February 2007 to $174,000 last month. Linthicum Heights, near Marshall Airport… prices dwindled 20% from $342,750 to $271,000 during February… Parts of Annapolis… [in areas] with prices greater than $400,000, saw minor drops.” (Hometown Annapolis, Mar. 23rd)

Investors Rode Housing Boom, And Now Many Are Going Bust. “During the boom, the median home price in San Diego County more than doubled from $246,000 in November 2000 to $518,000 at the peak in November 2005, rising at an average clip of 22% per year… The median price of a San Diego home in February was $415,000 – a 20% decline from the peak. Meanwhile, the number of county foreclosures in January surged 257% over the same month last year to 1,305.” (Sign on San Diego, Mar. 23rd)

Housing Prices Can Stall For a Long Stretch of Time. “The nationwide slump in home prices could last for a long, long time -- especially if you count the toll exacted by inflation… The inflation-adjusted average price of an existing home peaked in 1979, didn't bottom out until 1984 and didn't return to the 1979 level until 1995... "Real" -- that is, inflation-adjusted -- home prices went nowhere for 16 years. Granted, inflation during that period was running at an average of 4.7%, versus 2.6% since 1995. But that doesn't mean real home prices will now fare better.” (Wall St. Journal, Mar. 23rd)

Market's Low ? Except Up High. New Mexico: “Santa Fe Association of Realtors president Baro Shalizi: The Santa Fe market… has been depressed for 8-9 months… The number of homes sold during H2’07 was down in all eight quadrants of the city and county from 2006 levels. The biggest change was a 55% drop in the southeast-city area… Although the Q4’07 median price was down 48% in the north-county area, it was 22% higher than Q4’06 in the northwest county [where] the latest median price was $910,000. The biggest impact of the current downturn has been felt in the lower and middle sections of the marketplace, where buyers spend between $185,000-$750,000."(Trading Markets, Mar. 23rd)

Woes in Condo Market Build As New Supply Floods Cities. “Real-estate-research firm Reis Inc.: More than 4,000 new condominiums will be completed in both Atlanta and Phoenix by the end of the year. Developers in Miami and Fort Lauderdale, Fla., are readying nearly 10,000 total new units in a market already struggling with canyons of unsold condos. San Diego, another hard-hit region, will add 2,500 units… The U.S. finished 2007 with a supply of condos large enough to absorb 10 months of demand, the highest level since the NAR began the tally in 1999. Foresight Analytics: Lenders of all sizes have $42 billion of condominium debt on their books… Between the Q3 and Q4’07 -- the delinquency rate rose to 10% from 5.9%.” (Wall St. Journal, Mar. 22nd)

DEMOGRAPHICS: Single Women Praise Lennar's Designs. “NAR: Single women now make up more than 22% of the new home buyers market and are increasing in numbers every day. Second only to traditional two-income families and nearly triple the rate of single men… According to recent research by NAR and Harvard University's Joint Center for Housing Studies, women's salaries are rising overall. This greater sense of financial independence makes it easier for single women to purchase and make payments on a home themselves rather than relying on a second household income.” (Las Vegas Review Journal, Mar. 22nd)

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