Distressed properties gallop, home prices stumble

According to a report just released by the National Association of Realtors (NAR), the steep slide in home price accelerated at a record pace during the first three months of 2009 in the largest year-over-year decline in the 30-year history of the report. The national median home price of single family homes sold during the first quarter fell 13.8% to $169,000 year over year, and 6.2% compared with the last quarter 2008. NAR says that first-time homebuyers, who are often entry-level buyers, accounted for about half of all purchases during the quarter, and that many buyers took advantage of the deeply discounted prices of foreclosed properties and short sales.

These "distressed properties" typically sell for 20% less than traditional homes, according to NAR, and accounted for about half of all transactions. "Traditional homes in good condition have held their value much better, so owners shouldn't be overly concerned about median prices," said NAR president Charles McMillan, in a prepared statement. NAR's chief economist, Lawrence Yun, characterized it as a lull before an upturn. "Housing affordability conditions are at record high levels," he said, "and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas."

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Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the National Association of Realtors®.

Nationally, the Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2% to 84.6 from a level of 82.0 in February, and is 1.1% higher than March 2008 when it was 83.7. Lawrence Yun, NAR chief economist, said it should take a few months for the market to gain momentum. ”This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” he said. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”

Locally we are seeing an increase in sales (some would even say a supermassive increase in sales). For more information, contact JACE today!