I was interviewed by our local CBS affiliate a couple of weeks ago. They were doing a story on the slowing housing market. There was only anecdotal evidence of the slow-down. My view was that the current slow-down was the backlash from the Federal Tax Credits. I coined it, "Cash for Clunkers Comes to the Housing Market."
This week the National Association of REALTORS® (NAR) released the July sales figures. NAR states, "Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009."
A couple of their charts say it all. The first is the Seasonally Adjusted Annual Rate:
The second is the Months of Supply:
If my "Cash for Clunkers" analogy is correct, we will see prices continue to fall before they start rebounding.
While these are national numbers, it will be interesting to see how local markets are impacted as data become available.
Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton. While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure. Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.
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Not a pretty picture or chart but one we must all accept and make the best of what we have given there is no light at the end of this tunnel yet.
The prices will continue to drop because of the glut on new homes as the graph indicates. This is made all the more confusing between distressed houses and non distressed houses. The prices are falling on everything. With low interest rates it is time to buy,isn't it?
Larry,
I'm not convinced the Federal Tax Credit brought new buyers into the market. While there were some, I argue most of them were simply moved up from later in the year. This stimulated market ran it's course and now there will be a rebound effect before things level out.
Lower interest rates don't matter since the real issue now is getting people qualified at all.
Housing is not going to lead the way out of this mess--we need to get the economy going and get people back to work.
Tom
I agree that the tax incentive didn't do much for the long run. Most of my clients didn't use the credit, didn't qualify (they earned too much), or bought after the expiration since it didn't matter one way or the other. We'll have to readjust pricing, qualifying buyers, and sit this out. I think people are just afraid that they'll be victims of foreclosures. It's scary to think that so many people have been affected -- and the government has done absolutely nothing. This is what is causing the paralysis, IMHO.
First time home buyers are always the largest buying group in any market, sellers etc...
Not sure it helped them as most would have bought anyway. Yes I agree I think it is the reason for the slow down right now.
Here in DC, I am convinced that the awful numbers were due to 100+ degree heat we had during the month of July.
Tom, love your analogy 'Cash for Clunkers'. I would agree with your analysis for the bottom of the market and the first time home buyer.
The Tax Credit unfortunately stimulated nothing. It just made buyers buy sooner. Yes, we're going to be in it for a while.
Did you realize that buyers are coming in hard on prices too?
Tom, as odd as it might sound on the surface, Patricia Kennedy has a point. We've also been going through unusually hot weather and I've noticed that when it cools off the people actually do come out more to open houses, visiting the office, I even get more calls when the weather is nicer. I also agree that markets are different and ours just isn't that bad. I'm actually very busy although I have seen many more renters lately.
Nick,
I have not had the chance to reseach the local stats but we're used to the heat.
Tom