Existing Home Sales and Prices continue to fall, according to the latest release from the National Association of Realtors. Existing Homes Sales fell in 38 states, led by steep declines in Arizona, Florida and California, as once-booming housing market showed further signs of a steep
The WSJ noted that "the declines were the largest in once-booming areas of
the country. Sales fell by 36% in Arizona; 34.2% in Florida and 28.6%
in California. In all, nine states had sales declines in the summer of
20% or more compared to the third quarter of 2005."
The NAR also noted weakness in sales in metropolitan areas. According to a separate
survey by the Realtors group in 148 metropolitan areas, price surveys
showed that the median — or midpoint — price for an existing home
sold in the third quarter dipped to $224,900, down 1.2% from a year
In my experience, the reported median sale drop of 1.2% simply does not accurately reflect reality; I suspect it is being biased upwards by "trophy" property prices prices and other adjustments.
Warning: Anecdotal story to follow
Last summer (’05), we looked at an out-of-our-price-range 7 figure plus property. "Its for comparison purposes only" said the Real Estate Agent.
Of course, Mrs. Big Picture fell in love with it. Sunken living room, gorgeous kithcen, fireplace in the Master BR, huge piece of property, just a 5 minute walk to the L.I. Sound. We heard thru the grapevine that a deal was had, fairly close to the asking price. Comparables on the same street had gone in the nines and better.
But the deal fell apart, and the house went back on the market. We watched it over the next 14 months on line at MLSLI, as the sellers chased the market down: $50k off, then another $40k then another $60, and then another and another. The price eventually fell 20% from original asking price.
I asked the agent what the repsonse would be if I offered yet another $50k less than the re-reduced price. She said: "They would jump on it." We would then have to figure out how to sell my more modest home between Thanksgiving and Xmas. (yeah, good luck with that).
In speaking with other agents and watching the online listing of prices drop, its apparent that this was not a unique situation. Prices continue to drop, and a whole lot more than the 1.2% the NAR is revealing. Prices are falling rapidly due to what can be euphemistically described as "motivated" sellers. Maybe this helps explain some of the reason why: Foreclosures spiked up 42% in October (year over year).
Perhaps the usually hallucinogenic David Lereah, the Realtors’ chief economist, got it is right this time: "With the market
in full transition, buyers now have choices [read: more inventory] and sellers are more
willing to negotiate [read: desperate]. Under these circumstances, it’s no
surprise that overall home prices are slightly below a year ago."
As the admittedly anecdotal example shows, "slightly" is a slight exaggeration . . .
Total state existing-home sales
Third-quarter metro area single-family home prices
Foreclosures spike in October, Up 42% over a year ago; Colorado, Nevada and Georgia lead.
CNNMoney, November 17 2006: 9:12 AM EST
Leading Economic Indicators Inched Higher in October
MICHAEL S. DERBY
November 20, 2006 10:49 a.m.