Wikinvest Wire

Existing home sales look for a new bottom

Wednesday, February 25, 2009

The National Association of Realtors reported sharply lower sales of existing homes during the month of January with more large price declines driven by distressed sales. A full 45 percent of all existing home sales are said to be either foreclosures or short sales.
IMAGE Sales dropped 5.3 percent from a seasonally adjusted annualized rate of 4.74 million units in December to 4.49 million in January, the lowest pace in 12 years.

On a year-over-year basis, sales were down 8.6 percent and, what looked to be a bottom in home sales last fall (not to be confused with home prices), may now be giving way to a new lower range of activity.

As might be expected and as illustrated in the chart above, the move down from just below the 5 million level to below the 4.5 million level coincided with the latest acceleration in the global credit crisis late last summer, after accounting for the typical delay from real estate sales contract signing until closing.

The inventory of unsold homes declined slightly in January but, due to the lower sales volume, the "months of supply" metric rose from 9.3 months to 9.6 months.

The median sales price fell 3.1 percent to $170,300, the lowest level in almost six years, and home prices are now down 14.8 percent from year-ago levels.

Lawrence Yun, NAR chief economist, noted the following:

Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus. The housing market will soon get a lift from very favorable buying conditions – not only from improved affordability, but also from the stimulus of an $8,000 first-time home buyer tax credit, and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates.
Interestingly, according to this report in the Las Vegas Sun the other day regarding the local housing market, one of the "ground-zero" areas where annual price declines still clocked in at minus 33 percent as of December, Mr. Yun had a more upbeat tone:
“You have gone through some very tough times, but any further decline, if any, would be minimal,” Yun said of median prices that have fallen $138,000 over the past two years to a price of $150,000 in January. “Given $150,000 is very affordable for such a dynamic metropolitan region, once the economy recovers, you are in good shape. But it is just getting over the short term.”

During an interview, Yun said he sees Las Vegas prices stabilizing in the second half of the year and by the fourth quarter they could be higher than the end of 2008. The median price at the end of 2008 was $157,250, according to SalesTraq.

Yun said he wouldn’t be surprised if prices appreciate more than 5 percent in 2010 but adds one caveat to his prediction – that while the long-term outlook for the Las Vegas housing market looks good, it is hard to make short-term forecasts.
I wouldn't be surprised if people stop gambling either.

Careful there Larry - that kind of talk is what got your predecessor in trouble...

ooo

4 comments:

Nostradamus, apparently said...

LOL!!

"Most, if not all, of the decline in housing prices has occurred."

As I noted earlier, Credit Suisse has a graph showing peak defaults for Alt-A and Option ARM loans won't occur until May, 2010.

That means the true inventory, including shadow inventory, will keep growing for a long time.

Unless Obama et al manage to repeal the law of supply and demand, prices would seem to be headed down for a long time, too.

Their attempts to hold up home prices seem amazingly futile and naive to me but, I'm just a simple moron from rural America. I can't comprehend all this new-fangled socialism stuff.

Dan said...

I agree. It's all about the shadow inventory.

Anonymous said...

I am well beyond disgusted. Crises are an opportunity to grab more power. Real solutions will not come from a plan at the national or international level. Don't let that happen. Instead, we need to look for them at the local and community level.

Nostradamus, apparently said...

Anonymous

Right on! You're one of the rare breed who actually wants to be involved and come up with local solutions to problems rather than look to Big Daddy to fix everything for you.

That is a rare find, indeed, these days.

Most people seem to be embracing socialism in the fantasy that there is some big, all powerful entity out there can make their lives wonderful without them having to get their hands dirty.

Some here seem to yearn for America to dump its founding ideals and fully embrace socialism if not communism.

They seem to be winning at the moment.

As a result, I have become concerned that secession may be necessary for those currently in the minority who don't want to be stuck with the consequences of being everyone's babysitter from cradle to grave.

While it's far from perfect, I think the Free State Project folks have a pretty good idea.

It's fun to check out:

http://www.freestateproject.org/

  © Blogger template Newspaper by Ourblogtemplates.com 2008

Back to TOP