Sales of existing homes continued their decline in January to the lowest levels in almost 12 years. No big surprise to us real estate professionals…right? But some of us actually thought that home sales were on the increase and would post positive numbers in the first month of the new year. To the contrary, however, the National Association of Realtors reported sales of existing homes fell over 5% in January, thereby taking the award for weakest showing since July, 1997.
Don’t let the numbers mislead you, though. Most real estate agents will tell you that December is one of the toughest months to sell a home, second only to August…and a close second at that. Yet home sales made a rather strong showing in the month of December, which led many to believe that the housing market may have hit the bottom. So one might argue, then, that the numbers reported really only tell the story of a bad month and not the total picture of the housing recovery many expected to see at the beginning of 2009. Seems justified to me, but taking a closer look may tell an entirely different story altogether.
Even taking the upward pace of home sales during the month of December into consideration, home sales still managed to fall almost 8% for the same month the previous year. While the national declination of home prices slowed in December, many people are still too worried about their job and general economic health to even consider a home purchase in their future anytime soon.
Let’s not forget that many of the home sales being posted are foreclosures as well. I’ve read several reports that have suggested upwards of 45% of home sales nationwide are foreclosed properties. And though standing inventory is being sold off at a reasonable pace, up almost 4% last month, the slower absorption equates to many more days on market with an ever increasing flow of ‘for sale’ product into the back end of the real estate machine.
But many still claim that they see the light at the end of the tunnel. The economic stimulus plan combined with historically low interest rates and a generous home buyer tax credit will go well with some of the most affordable home prices in years. Many buyers are even flocking to areas once thought to be too expensive just a few years ago since now those prices have come down and today are simply within the price range. So what are those buyers waiting for? Perhaps to see if the economic stimulus plans actually works. After all, no one wants to be the first to jump into the proverbial pool.
So what do I expect? I too am beginning to see the light at the end of the tunnel. Associates of mine in the industry from all points across the country are reporting a noticeable increase in daily sales calls and activity. The approved economic package the economic inclusions for the housing industry will help tremendously once that money finds its way into the system. I also think the increase in loan limits for Fannie Maecand Freddie Mac will give the industry the extra push it needs to jump start the housing market once again.