Housing Market Not All Bad for 2007
Sales across America have slowed down since our infamous “housing bubble” deflated in 2006. REALTORS and homesellers alike have felt the twinge of slower sales and lower prices.
Many states saw double-digit drops in the percentage of home sales in the 4th quarter of 2006 compared to the prior “good times” 4th quarter of 2005 (according to statistics from the National Association of REALTORS). The study included sales of single family homes, condos, and co-ops.
In my home state of Arizona, sales dropped by 26.9% - we were beat only by Nevada at -36.1% and Florida at -30.8%. Ouch!
See how your state compares in home sales.
It’s not all bad news, though. NAR reports that median home prices are actually up for the 4th quarter of 2006 in 71 metro areas compared to the 4th quarter of 2005. Salem, Oregon boasts a whopping 19.8% increase. Certain cities, it seems, aren’t affected by the slowing market as much.
This good luck could continue through 2007. Most areas will likely continue to see a “correction” of the inflated 2005 prices, but it seems that buyers are settling into more of a comfort zone with that next home purchase.
David Lereah, the chief economist for NAR, believes that we will see a gradual rise in home sales activity this year and well into 2008.
Ouch! One of the issues not discussed in your post, Andrea, is that not real estate markets are getting hit as hard or doing as well. Each real estate market is unique and there are segments within each real estate market that are having widely different impacts from the real estate slow-down as well as from previous decisions regarding financing.
Let me cite an example of two developments within the Naples area - both communities were built by the same corporation, bundled golf course communities, almost identical sized and configured residences. They are located about 10 miles apart. Over the past six months one development saw about a 1.5% median price drop, while the other development saw the median price drop in excess of 15%!
In one area of Naples, the number of foreclosures has shot thru the roof, due to individuals that elected certain types of financing. The financing allowed them to continue poor personal financial habits. Now, that prices have cooled and interest rates slightly higher, the refi option for these individuals is totally out. They are now finding that what they owe is more than what they borrowed due to “deferred interest” or negative amortization. In other areas we are not seeing this situation.
Both buyers and sellers need to continually find REALTOR web sites or blogs where information regarding the local real estate market can be found.
I found it quick interesting that one real estate agent forum, when I asked the question “What Statistical Information Is Important For You?” The responses where rather none existant out of a real estate community of about 7,000 real estate agents. Maybe this is symbolic of one of the issues facing the real estate agent profession.
It also points out that buyers and sellers need to identify real estate agents that write about the real estate market and interpret or develop statistics from the local MLS. Real estate agents that have this knowledge and can express it could be the ones that will assist both a buyer and seller to a successful real estate transaction.
February 16th, 2007 at 8:08 amWhile my article here focused on national averages, it’s a great point, Glenn, that local markets - and even individual subdivisions - can vary widely in both pricing and sales activity.
February 18th, 2007 at 12:54 pmAndrea - your article was very good and I do know that you were looking at the real estate market on a national level. But, with all the doom and gloom in the press, we as an industry (local level) should be able to inform the public that national views, may or may not be reflective of the local or neighborhood situation.
As much as I find people on the blogosphere say don’t feed the real estate market conditions because the public is not interested. IMHO, it might be more important to the public today than it was maybe a few short years ago, when everything was increasing.
You know the old saying “you can’t see the forest because of the trees.” Maybe my personal thoughts about the real estate market conditions/statistics might be obscured.
February 19th, 2007 at 5:27 amLocal information is key if you are looking to buy or sell. Even state level information if way to general.
February 20th, 2007 at 10:51 pmNew Home sales dropped again in February, although the west coast wasn’t hit quite as hard as the central and eastern states.
March 27th, 2007 at 10:43 am