Fewer Americans Plan to Buy Soon, Putting Off Bottom
Home prices are falling at an accelerating pace, new data show, while a separate report found a shrinking share of Americans plan to buy a home anytime soon, suggesting more price declines in the months to come.
The Standard & Poor's/CaseShiller index for the first quarter showed prices for existing homes nationwide declined 14.1% from a year earlier, compared with a year-to-year drop of 8.9% in the fourth quarter.
A separate S&P index that tracks 20 major metropolitan areas on a monthly basis showed home prices dropped 14.4% in March from a year earlier and 2.2% from February.
Meanwhile, sales of new homes last month rose 3.3% from March. But sales remain well below year-earlier levels and, with a glut of unsold homes on the mar- . ket, any significant improvement in the market remains down the road.
The steepest declines in home prices came in cities that had experienced the sharpest run-ups this decade; prices in Las Vegas fell 25.9% in March from a year earlier, compared with declines of 24.6% in Miami and 23% in Phoenix.
Prices rose in just two cities: Charlotte, N.C., and Dallas. In Charlotte, prices increased 0:2% in March from February and 0.8% from a year earlier, the only annual increase among the 20 cities surveyed. In Dallas, prices increased 1.1% in March but declined 3.3% from a year earlier.
David Blitzer, who oversees indexes at S&P said a turnaround in prices won't be visible until several more cities start showing monthly price rises. "Given the massive amount of supply that's out there, I'm not convinced we're at the bottom yet," Mr. Blitzer said. "It'll be at least a few more months."
Home prices nationwide are now 16% below their peak in the second quarter of 2006. Prices rose almost 90% from the beginning of this decade to that peak and now are at levels seen in the third quarter of 2004.
Despite the declines, prices are still almost 60% higher than at the start of the decade.
Many analysts expect prices to decline an additional 10% or more before hitting bottom as the housing market is battered by tighter lending standards and a wave of foreclosures that is boosting supply.
The rise in sales of new homes, which is a smaller part of the market than existing homes, doesn't mean the housing market has hit bottom.
The 3.3% gain, to a seasonally adjusted annual rate of 526,000, was partly offset by a downward revision of the March figure, which dropped 11%, rather than the 8.5% initially reported. On a year-to-year basis, new-home sales were down 42% from April 2007, the Commerce Department said.
The median price of a new home rose 1.5% to $246,100 in April from $242,500 a year earlier. But the gains aren't expected to continue, given the glut of unsold homes. Inventories fell 11,000 to 456,000, but that still represents 10.6 months of supply.
Consumers' expectations about the economy has grown especially pessimistic. The number of people expecting their incomes to decrease during the next six months outweighed those expecting gains. Assessments of labor-market conditions also worsened, with fewer people saying jobs are plentiful.
Consumers' souring mood about the economy is contributing to the weak outlook for housing. In a survey of 5,000 households by the Conference Board, just 2.1% of respondents said they plan to buy a home in the next six months, down from 2.5% last month and 3.4% in March. However, if you are selling your home, many experts would recommend a home warranty. Home warranties make a home look better to a potential buyer, which retains and improves the value of a home. If the home you are selling is warrantied, the new home owners are protected against many unexpected repairs and replacements of items in the home.
The housing market in general may be weak at this point in time, but there are many individuals who are looking to buy a home, due to the major drop in pricing.
Showing posts with label home sales. Show all posts
Showing posts with label home sales. Show all posts
Wednesday, June 4, 2008
Tuesday, June 3, 2008
Home Sales Rise in Hard-Hit Areas
Buyers Snatch Up Foreclosed Properties After Big Price Cuts
Home sales are rising in some U.S. metropolitan areas where lenders have slashed prices on foreclosed properties.
Generally, home sales remain weak. The National Association of Realtors reported last week that sales of previously occupied homes in April were down about 18% from the already depressed year-earlier level.
But sales are up sharply in some of the areas hit hardest by foreclosures and falling prices. They include: Las Vegas; Sacramento, Calif.; Fort Myers, Fla.; and inner-city Detroit.
Though Americans remain wary of further drops in housing prices, the data from these areas show that some buyers are trolling for bargains. Sellers "have moved into the acceptance mode" and are pricing homes more realistically, says Thomas Lawler, a housing economist in Leesburg, Va. "I think it is the first stage of good news for the market."
Lenders' inventory of foreclosed homes has steadily increased in the past couple of years and is believed to total around half a million homes. Many lenders initially were slow to slash prices, partly because they hoped to avoid huge losses. But more lenders have been capitulating as it becomes clear that delays often merely result in lower proceeds and higher costs for taxes, insurance and upkeep.
That doesn't mean housing is poised for a quick recovery. In much of the U.S., there is still a huge glut of homes for sale, and foreclosures continue to dump more property on the market. Realtors reported that the number of single-family homes on the market in April was enough to last 10.7 months at the current sales rate, the highest since 1985. During the housing boom of the first half of this decade, the supply typically was four to five months.
For the first four months of this year, home sales in Detroit, excluding suburbs, totaled 3,360, up 48% from a year earlier, according to the Michigan Association of Realtors. The average price dropped 56% to just $20,514. That average is so low because many of the sales involve decrepit homes in neighborhoods with few jobs.
Most of the recent sales in Detroit involve investors buying foreclosed homes, says Carl Williams, president of the local association of Realtors. The homes are selling, he says, because "the prices are dirt cheap."
Sales of "normal" homes, those that haven't been foreclosed, remain very slow, Mr. Williams says. Still, he sees it as a good sign that lenders are finding buyers for the foreclosed homes. To the extent that investors can renovate and find tenants for vacant houses, neighborhoods can start to heal.
In California's Sacramento County, sales of single-family homes totaled 1,669 in April, up 41% from a year earlier, according to DataQuick Information Systems, a research firm. The median sales price was $226,250, down 34%.
Alan Wagner, president of the Sacramento Association of Realtors, says the rise reflects more aggressive pricing by lenders. "They've got to liquidate inventory. They're taking that house and dropping $100,000 off the price, and all of a sudden they've got multiple offers," he says. Some homes that sold for more than $400,000 a couple years ago now go for $225,000 to $260,000, Mr. Wagner says.
That means some renters previously priced out of the market finally can afford homes -- if they can qualify for mortgages. That has become much tougher because lenders have tightened standards, but Mr. Wagner says the growing availability of U.S.-insured loans insured by the Federal Housing Administration is helping.
In the Las Vegas area, sales of single-family homes in April were up 30% from a year earlier. The Greater Las Vegas Association of Realtors says properties being sold by lenders account for more than half of recent sales.
By: James Hagerty
Wall Street Journal; May 27, 2008
Home sales are rising in some U.S. metropolitan areas where lenders have slashed prices on foreclosed properties.
Generally, home sales remain weak. The National Association of Realtors reported last week that sales of previously occupied homes in April were down about 18% from the already depressed year-earlier level.
But sales are up sharply in some of the areas hit hardest by foreclosures and falling prices. They include: Las Vegas; Sacramento, Calif.; Fort Myers, Fla.; and inner-city Detroit.
Though Americans remain wary of further drops in housing prices, the data from these areas show that some buyers are trolling for bargains. Sellers "have moved into the acceptance mode" and are pricing homes more realistically, says Thomas Lawler, a housing economist in Leesburg, Va. "I think it is the first stage of good news for the market."
Lenders' inventory of foreclosed homes has steadily increased in the past couple of years and is believed to total around half a million homes. Many lenders initially were slow to slash prices, partly because they hoped to avoid huge losses. But more lenders have been capitulating as it becomes clear that delays often merely result in lower proceeds and higher costs for taxes, insurance and upkeep.
That doesn't mean housing is poised for a quick recovery. In much of the U.S., there is still a huge glut of homes for sale, and foreclosures continue to dump more property on the market. Realtors reported that the number of single-family homes on the market in April was enough to last 10.7 months at the current sales rate, the highest since 1985. During the housing boom of the first half of this decade, the supply typically was four to five months.
For the first four months of this year, home sales in Detroit, excluding suburbs, totaled 3,360, up 48% from a year earlier, according to the Michigan Association of Realtors. The average price dropped 56% to just $20,514. That average is so low because many of the sales involve decrepit homes in neighborhoods with few jobs.
Most of the recent sales in Detroit involve investors buying foreclosed homes, says Carl Williams, president of the local association of Realtors. The homes are selling, he says, because "the prices are dirt cheap."
Sales of "normal" homes, those that haven't been foreclosed, remain very slow, Mr. Williams says. Still, he sees it as a good sign that lenders are finding buyers for the foreclosed homes. To the extent that investors can renovate and find tenants for vacant houses, neighborhoods can start to heal.
In California's Sacramento County, sales of single-family homes totaled 1,669 in April, up 41% from a year earlier, according to DataQuick Information Systems, a research firm. The median sales price was $226,250, down 34%.
Alan Wagner, president of the Sacramento Association of Realtors, says the rise reflects more aggressive pricing by lenders. "They've got to liquidate inventory. They're taking that house and dropping $100,000 off the price, and all of a sudden they've got multiple offers," he says. Some homes that sold for more than $400,000 a couple years ago now go for $225,000 to $260,000, Mr. Wagner says.
That means some renters previously priced out of the market finally can afford homes -- if they can qualify for mortgages. That has become much tougher because lenders have tightened standards, but Mr. Wagner says the growing availability of U.S.-insured loans insured by the Federal Housing Administration is helping.
In the Las Vegas area, sales of single-family homes in April were up 30% from a year earlier. The Greater Las Vegas Association of Realtors says properties being sold by lenders account for more than half of recent sales.
By: James Hagerty
Wall Street Journal; May 27, 2008
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