By Staff
ST. JOSEPH – "We are seeing a significant decline in the sales of homes moving into the end of 2008. October was 20 percent behind September and November was 30 percent behind October. An end-of-year decline is not unusual except that the percentages are higher this year than in the past signaling the local real estate market is following the national trend of reduced home sales. With just 63 fewer houses sold in November than in October, the dollar volume dropped 49 percent, average price 27 percent, and the median price dropped 12 percent from October to November. This difference indicates that lower priced homes were sold and closed," said Gary Walter, EVP, of the Southwestern Michigan Association of REALTORS(r), Inc.
Walter went on to say "And while we have had a declining market this year, qualified buyers should now find that it is the "golden opportunity" to buy a home with historical low interest rates for a 30 year fixed rate loan and a large selection of homes available at affordable prices."
"The year-to-date (YTD) numbers held steady for the better part of year. From May until November, the percentages stayed within a fairly close percentage range for the key market numbers. Compared to the same month in 2007, the number of homes sold each month remained 17-19 percent behind last year. The YTD total dollar volume ran 21-26 percent behind, YTD average price 4-8 percent behind, and YTD median price 2-7 behind last year's figures. This has not been a record year for highs or lows when you look at the total picture. We have an advantage in that our market is diverse. Because we are comparing an almost three county area you really should contact your Realtor to get more specific details about your local market area," Walter said.
Nationally, existing-home sales weakened against a backdrop of an eroding economy, according to the National Association of Realtors(r).
Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 8.6 percent to a seasonally adjusted annual rate of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007.
Regionally, existing-home sales in the Midwest fell 7.4 percent in November to a pace of 1.00 million and are 16.0 percent below November 2007. The median price in the Midwest was $142,400, down 11.2 percent from a year ago.
Lawrence Yun, NAR chief economist, expected a decline. "The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level. We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001," he said.
"It is, therefore, imperative to provide incentives for homebuyers to get back into the market. It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit," Yun said.
The number of houses sold and closed in SWMI in November decreased 37.5 percent from November 2007 (147 vs. 235). The number of homes sold year-to-date was down 537 houses or 19 percent from last year. The total dollar volume for the month was down 51 percent verses last year ($23,767,452 vs. $48,499,427). Year-to-date total dollar amount was down 25 percent. The average selling price dropped 22 percent over November of last year ($161,683 vs. $206,381). Year-to-date the average selling price was 7 percent below last year ($184,305vs. $198,762).
The median price was down 12 percent ($110,000 vs. $125,000). Year-to-date the median price is down 4.5 percent from last year ($120,500 vs. $125,609). The median price is the price at which 50 percent of the homes sold were above that price and 50 percent were below.
The national median existing-home price for all housing types was $181,300 in November, down 13.2 percent from November 2007 when the median was $208,800. There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less.
Yun cautioned that there will be negative consequences if housing stimulus is delayed. "Falling home prices would lead to faster contraction in consumer spending and further deterioration in bank balance sheets. More importantly, falling home values would lead to higher loan defaults, including those recently modified distressed mortgages."
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said it's crucial to enact sufficient housing stimulus to spark an economic recovery. "We need more than low interest rates to encourage enough buyers to enter the market and meaningfully draw down inventory, which would stabilize home prices – that, in turn, would help the economy to recover," he said.
"We should extend the first-time buyer tax credit to all homebuyers and eliminate the repayment feature, and make permanent the higher loan limits that are vital in high-cost markets – the faster we do this, the faster housing and the economy can recover," McMillan said.
McMillan said NAR is grateful that the Treasury, the Federal Housing Finance Agency and the Federal Reserve have been working to bring interest rates down on most mortgages to historic lows
In SWMI, the average mortgage rate decreased from 6.48 in October to 6.20 in November. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased from 6.20 percent in October to 6.09 percent in November. The rate was 6.21 percent in November 2007. Last week, Freddie Mac reported the 30-year rate fell to 5.19 percent – the lowest on record since the series began in 1971.
Nationally, the total housing inventory at the end of November rose 0.1 percent to 4.20 million existing homes available for sale, which represents an 11.2-month supply – at the current sales pace, up from a 10.3-month supply in October.
Despite an overall softening in sales, there has been a solid trend of rising activity in California, Nevada, Arizona and Florida markets. "Sales are rising only in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices," Yun said.
Regarding the local market Walter reported, "Our homes-for-sale inventory increased barely 0.2 percent from November 2007. With roughly 3328 homes for sale, we still have a 16-month supply of homes for sale based on the past 12 months of sales. The inventory declined by 172 homes or 5 percent from October to November. Historically this is our trend, the amount of inventory for sale decreases from September through the rest of the year.
The numbers reported for local sales include residential property in Berrien, and the western half of Van Buren and Cass counties. All three counties are included in numbers and percentages and do not reflect differences in any individual areas.
The Southwestern Michigan Association of REALTORS(r), Inc. is a professional trade association for real estate licensees and ancillary service providers for the real estate industry in Van Buren, Berrien and Cass counties.
The Association is located at 3123 Lake Shore Drive St. Joseph, MI 49085, (269) 983.6375. They can also be contacted through their web site, www.swmar.com.
The National Association of Realtors(r), "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.