Posts Tagged ‘Existing Home Sales’
Florida’s existing condo sales rise in July
Sales of existing condominiums in Florida rose 11 percent in July, with a total of 5,557 condos sold statewide compared to 4,991 units sold in July 2009, according to the latest housing data released by Florida Realtors®. Eleven of Florida’s metropolitan statistical areas (MSAs) reported higher existing condo sales in July, according to Florida Realtors. The statewide existing condo median sales price last month was $87,200; in July 2009 it was $108,500 for a 20 percent decrease. The national median existing condo price was $181,300 in June, according to the National Association of Realtors® (NAR). Meanwhile, in the year-to-year comparison for existing home sales, a total of 13,589 single-family existing homes sold statewide last month compared to 15,762 homes sold in July 2009 for a decrease of 14 percent. Florida’s median existing-home sales price in July was $138,000; a year earlier, it was $147,600 for a decrease of 7 percent. The median is the midpoint; half the homes sold for more, half for less. “The homebuyer tax credit expiration added a double dip to what has already been a harrowing ride in the Florida housing market,” said Dr. Sean Snaith, director for the University of Central Florida’s Institute for Economic Competitiveness. “As we move past this second dip, which is evident in the July data, the continued recovery of the state’s housing market will be contingent upon the improvement of the fundamental underpinnings of the housing sector. “A healthy housing market depends upon a healthy Florida economy, and in particular, an improving labor market,” Snaith added. “Job growth and a declining unemployment rate will help sales continue to grow while at the same time reducing the number of foreclosures in Florida.” 2010 Florida Realtors President Wendell Davis, a broker with Watson Realty Corp. in Jacksonville, noted that the Gulf oil spill, along with uncertainty over its impact, has affected the state’s housing market. “Along with many local businesses in the Florida Panhandle and in other Gulf Coast states, real estate has experienced significant economic harm following the Deepwater Horizon drilling rig explosion and oil spill,” Davis said. “The announcement that a special allocation from the BP Oil Spill Fund is now available to help the claims of real estate professionals’ – Realtors and licensees – over loss of income or sales due to the Gulf oil spill is a positive action that will help bolster the state’s fragile economy recovery.” The national median sales price for existing single-family homes in June 2010 was $184,200, up 1.3 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $331,150 in June; in California, it was $311,950; in Maryland, it was $265,268; and in New York, it was $220,750. More jobs continue to be key to the housing sector’s recovery, according to NAR’s latest industry outlook. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” said NAR Chief Economist Lawrence Yun. The interest rate for a 30-year fixed-rate mortgage averaged 4.56 percent in July, down from the 5.22 percent averaged in July 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
The Housing Markets: Supply, Demand, and Current Issues
Every month the press is filled with commentary on the latest housing market figures. Some of the stories would benefit from additional perspective. In this month's “Behind the Numbers,” we focus on some of the housing market problems in the news: supply, demand, and the outlook. Of course, all housing is local, so the information needs to be considered in conjunction with knowledge of local market conditions Distressed Property and Shadow Inventories In the past year approximately 33 percent of existing home sales at the national level have involved distressed properties (foreclosures, short sales) selling at discounts of 15 to 20 percent from non-distressed market prices—exerting a major negative impact on overall market prices. There has also been concern over a potential shadow inventory of distressed properties: as of the first quarter of 2010 over 6.5 million homes were in foreclosure or had overdue mortgage payments. Possibly as much as 75 percent of the shadow inventory will ultimately be sold as distressed. However, given the ongoing time delays for problem resolution it appears that distressed properties will enter the market at approximately the current or a slightly increased rate for the next few years. Foreclosures are a major negative market influence in terms of price, consumer confidence, and expectations; however, a tsunami of shadow inventory appears unlikely. Potential Pent-Up Demand: Possible Longer Run Impact There are a variety of techniques for measuring expected housing sales based on economic factors, demographics, financial markets, etc. A simple trending of the existing home sales market based on sales rates during 1988-2000, a time period before the recent market run-up/de-leveraging/decline/recession situations, suggests a pent-up demand in the neighborhood of 15 percent relative to today’s sales. That is, existing home sales could be expected to be possibly 15 percent higher in a normal market. We are, however, far from a normal market, given that we have been through major financial de-leveraging, the Great Recession, and that consumer mood is at best shaky. A number of homeowners who have deferred listing their homes due to market conditions may also now reenter the market, resulting in increased home inventories as the economy recovers. Once the employment numbers improve, pent-up demand may help to increase sales. In the short run, however, we may actually see additional inventory on the market as a result of listings by deferred sellers. Housing Starts: Construction Rate Appears to be Below the Long Run Demand The supply of all types of new housing units has been reaching new lows, declining from single family starts at over 1.7 million per year in late 2004 to 454 thousand in June 2010. The demand for new housing units ultimately depends on family formations, sales for vacation homes, and replacements for units demolished or destroyed. Based on assumptions about demolitions and second homes, the graph indicates that in recent years, the projected demand for new homes has actually exceeded supply. Decreased new construction obviously makes major headlines in the short run; in the longer run it should help to bring the overall housing market into balance. Market Data Shows How Housing Inventory Impacts Prices There will always be an inventory of unsold homes on the market. An increase in the inventory of unsold homes indicates that there is an excess supply relative to demand. The graph shows how prices tend to rise as supply falls. During the first part of 2010 the months’ supply of inventory decreased from earlier highs—accompanied by stabilizing prices. In June, month’s supply increased to 8.9 months from the previous 8.3 months. If the increase proves to be a temporary adjustment due to pent-up listing of homes, then prices should continue to stabilize, particularly if employment increases. If inventory supply continues to increase without adequate job increases, the housing market will be subject to additional pricing pressures. Conclusions/Implications for REALTORS® The above comments provide a perspective on how the housing market is positioned to resolve its problems: First, the level of distressed sales is likely to continue for the next several years, negatively impacting prices and the new construction market at entry level. However, a tsunami of additional distressed property sales appears to be unlikely. Second, the existing home sales market appears to be below normal projected growth, apparently held back by employment problems and mediocre consumer mood. The data suggest that there is pent-up demand, but a greater economic recovery, particularly in jobs, appears to be necessary before the demand is unleashed. Third, new home construction appears to be below long-run demand. In the longer run this will reduce the total supply of homes on the market, working to firm up prices. Fourth, the inventory of existing homes on the market in June was approximately 8.9 months, an increase in housing inventory, possibly due to additional listings developing as the market starts to recover. An increased inventory at this point could become a negative for prices unless an expanded economic recovery releases some pent-up demand. Assuming that the economy is not hit with a “double dip” recession, all of the data seem to indicate favorable prospects for sales—unlikely to decrease in the short run, positioned to increase once the economy adds additional jobs. In the case of prices, there are no indicators of major changes either way unless the inventory of unsold homes increases significantly. At the local level, areas with stronger job recovery, improving economies leading to fewer foreclosures, and local economies able to unleash additional pent-up demand should experience somewhat greater improvement. The comparison of local numbers (jobs, foreclosures, short sales, inventories, etc.) with national numbers provides a context for the evaluation of specific markets.
Predicting Home Prices a Perilous Prospect
Don't be fooled by the little uptick in home prices in today's Existing Home Sales report from the National Association of Realtors. That was the message from the Realtors themselves!
Existing Homes Sales are Up-But Realtors are Still Down
Today's existing home sales report should have had analysts, experts, economists, and Realtors dancing in the streets.
What’s Really Behind the Surge in New Home Sales
This is real proof of the tax credit boost, because this data series is based on contracts signed, unlike the Existing Home Sales series we got Thursday from the Realtors, which is based on closings.
