Here's the third of the stories I'm posting today as part of my catch-up day on the blog. None of the news sounds particularly good. Some would say you'd have to be an idiot to buy now. And yet, I'm looking for opportunities to buy. Other agents I know have just purchased or are looking. Ergo, I'm an idiot and all agents are idiots. Many people would agree would that remark. But let me tell you why I'm looking right now. First, rates are at all-times lows. Foreclosure inventories are high. Inventories in general are high. This leads to downward price pressure. I think prices will probably continue to drop. BUT, if you find a house that makes sense for you, and can lock in a ridiculously low rate, why would you wait for a mythical bottom to the market? If you knew what the bottom was for any financial market, you wouldn't be reading this blog, or worrying about home prices, because you'd have bought all your stocks at their low and sold them at their highs. You'd be fabulously wealthy. But you're not. You're like most of us, and most of us, if we see a great house with a great mortgage rate, should buy that house now, because even if prices in general may slip a bit more, you MIGHT NOT FIND THAT HOUSE AGAIN. Would you rather buy a great house for $200k or wait six months and settle on a different house for $190k? You think your wife will be happy in the house you settled on? Again, as I've said ad nauseum on this blog, if you're looking to move in a year or two, it's not a smart move, because of downward price pressure. But if you're looking to settle into a house and stay there, don't wait for another $10k in savings.
Housing sales in July plunged to their lowest level in more than a decade, exceeding even the grimmest forecasts.The National Association of Realtors said Tuesday that the seasonally adjusted annual sales rate of 3.83 million was 25.5 percent below the level of July a year ago.
July was the first month that buyers could not qualify for a tax credit of up to $8,000, so analysts were expecting weak results. But their consensus called for a decline of about 13 percent.
Jennifer H. Lee, senior economist for BMO Capital Markets, called the numbers “truly gut-wrenching.”
Those on the front lines of real estate describe an absolute standoff between buyers and sellers.
“What few buyers are out there circle a listing like a vulture, waiting from the day of its debut until it’s left for dead, contacting us only after it has left the market to ask what it sold for and whether it’s taking backup offers,” said Glenn Kelman, chief executive of the online brokerage Redfin.
Mr. Kelman noted that what made the sales drop “even more breathtaking” was that it was happening in July, a month when demand typically peaks.
“Prices will have to drop again in most markets before buyers come back in force,” Mr. Kelman said, “and so sales volume will probably be in the tank at least until next spring.”
Housing prices have been relatively stable for most of the last 12 months. But even before the July drop in sales, analysts were expecting prices to fall another 5 or 10 percent this winter.
July sales were down 27.2 percent from June. It was the lowest rate for existing-home sales, which include houses, condos, co-ops and town houses, since 1999. For sales of single-family homes, it was the lowest rate since 1995.
The number of homes on the market increased only slightly but the large drop in sales was enough to push inventory levels up to 12.5 months. A normal market has an inventory level of less than six months.
Higher inventories tend to cause prices to decline, as many sellers compete to take advantage of fewer buyers.
The drop in sales came despite the lowest mortgage rates in decades.
The Realtor group was optimistic the fall-off would be temporary, as long as the economy improves — a rather big “if.”
“Given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs,” the group’s chief economist, Lawrence Yun, said in a statement.
View original article here: http://www.nytimes.com/2010/08/25/business/25econ.html?_r=1&src=me&ref=business
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
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