As new indicators on the languishing national housing market continue to stream in it remains apparent that the crisis brought about by the bursting of the housing bubble is far from over. Newly released figures reveal that the prices of houses declined with greater speed during the opening quarter of this year than at any point since the most severe consequences of the crisis became evident. This is based on information released in the Real Estate Market Report which has been made available by Zillow.
It has been predicted that the lowest point in the housing market decline will not be reached until 2012 at the earliest. If that’s the case, the process of full recovery will take a period of quite a few years. Zillow’s Home Value Index decreased to just under $170K, a drop of 3% compared to the 4th quarter of 2009. The company’s index explains the average valuation for a designated geographic location on a designated day. It incorporates the value of all condominiums, cooperatives and single-family homes. Information relevant to mortgages and home loans are generally noted in each county and is publicly accessible via a county recorder’s office.
To better understand the magnitude of the decline in the housing market, consider this: The prices of homes have, on average, decreased by just slightly less than 30 percent from the height of the peak in June 2006. That figure represents a massive hit for most homeowners in America.
Given the fact that the decline has shown no signs of slowing down during the first quarter of the year, it is overly optimistic to expect any stabilization in home prices by the end of this year. Only a small number of markets did not experience home value decreases this past quarter. The overwhelming majority of housing markets in the study (ninety-seven percent) faced decreasing values.
In light of this kind of news, it becomes increasingly clear that many Americans will require honest and authoritative assistance with loan modifications in the next few years. The burden that many are under in the present economic climate makes it simply impossible to meet existing mortgage obligations.
While they’re still significantly trailing last year’s figures, home sales data from the National Association of Realtors shows that the residential real estate market may be showing more signs of a steady recovery.
According to the NAR, the volume of sales jumped a seasonally-adjusted 10 percent in September compared to the previous month. While that number was still 19 percent below sales from September 2009, economists were generally optimistic.
“A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium,” said Lawrence Yun, NAR chief economist. “But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.”
The one soft spot in the report was a drop in the median sales price of homes, which fell 2.4 percent compared to a year ago to $171,000. That drop also occured amid a drop in housing inventory, which fell from 12 months to 10.7 months.
However, the positive report may not be enough to prevent further Federal Reserve action to spur the market. Analysts told Reuters they still expected the Fed to take steps to lower interest rates even further.
A new report from the National Association of Home Builders has found that first-time homebuyers are choosing to buy smaller and less expensive properties than existing buyers.
The study by the NAHB found that first-time buyers purchased homes costing an average of $184,000 with approximately 1,874 square feet of space. By comparison, the homes purchased by veterans of the real estate market averaged $297,000 and more than 2,500 square feet.
Bob Jones, chairman of the NAHB, says “Builders are increasingly gearing their homes to the needs of first-time buyers, and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households.”
First-time buyers, which accounted for 41 percent of home purchases from 2007 to 2009, had an average age of 34 years of age, while those trading up had an average age of 46.
However, the overall sales of new homes have continued to struggle in recent months. Statistics from the Commerce Department found there were 288,000 new homes sold in each of the last two months – the second-lowest mark since the government began keeping track.
New Cause for Confidence in the Real Estate Market
The US real estate market appears to be improving, at least according to one leading indicator. The April survey by Real Estate Confidence Index (RECI) suggests both improved market conditions and more optimism among real estate brokers and agents. The RECI, just released by Point2 Technologies, rose for the second month in a row.
For April 2010, the RECI recorded a 5.82 reading, that’s up from 5.77 in March. The RECI scale measures from 1 to 10, one being “bad” and 10 being “good.”
The positive response from survey respondents was fueled by improved current market conditions, with increased sales activity in the low- to mid-price range properties.
Many of the RECI survey participants pointed to the government tax credit, which expired on April 30, as the key reason for increased sales. Record-low mortgage rates didn’t hurt the real estate market either. More agents in more states reported multiple offer and bidding war situations than the month before. Some sales professionals also cited increased investor activity, possibly due to the high rate of foreclosures, which create bargain-basement home prices and increased home sales.
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