Last week we wrote that pending sales were up which may be a sign that closed sales might increase in August over July, and in fact sales were up 4.74% over the previous month. We also posted that pending sales were down 19% from last year, and official numbers just released show actual closed sales were down 4.71% from last year. These are not stellar numbers, but keep in mind July sales were down 27.45%
Sales could be up because median prices fell again 5.45% from the previous month, and 1.01% from last year. By the attached chart you can see that home prices peaked in April of 2010 as opposed to reaching the bottom last April. Home sale prices have now crossed over and fallen behind last year’s numbers. This is a telling sign, and one that is playing out all across America as the real estate market has stalled along with the economy.
Transactions pick up as prices go down, but we’d like to see more stability in the market. The median home price factor is more of an indication of affordable priced inventory as 1st time home buyers and investors are snapping up entry level homes as fast as they come on the market, and less inventory means fewer sales. We’d like to see more sales in the mid and upper price ranges before we can say we have a healthy market, but we don’t hear anybody calling this a healthy market just yet. Even though 2010 shapes up to be the 2nd best year on record for closed home sales, there is not broad support across several submarkets to call it a healthy market. If it was strong we’d see rising prices.
The good news is prices have held fairly stable except for a temporary run-up, and season is again right around the corner. Oil did not make it to SWFL, and today’s prices could again lure many from up North to purchase this season.
We’d like to see our government get back on track and offer incentives to get our economy and real estate market back on track, but that may have to wait until after the November elections as the current administration just doesn’t get it.
Real estate is traditionally about 32% of GDP and Main Street and the economy are married for better or for worse. It’s hard to cure one without the other, and yet we don’t seem to be doing anything to help either.
In the meantime, interest rates are at record lows, affordability is at record highs, and buying power has never been better, so anyone who is qualified to buy is in good shape. If the banks were to release more inventory, look out as this market could take off again. Failing that, we may be in for status quo numbers for a few months until some questions are answered in the elections and the job market turns around.