Saturday, May 23, 2009 10:30 AM
Real Estate Market Bottom, Real Estate Trends, Western North Carolina Real Estate
Predicting the real estate market bottom will always be easy after the fact. There will be various opinions in the mean time. The ones that get it right will remind us and the ones that get it wrong will probably be silent. First of all real estate cycles have always been and remain local in nature. That said, there is now data that would lead one to believe that the worst is behind us in many markets. The national median house price is down 13.8% in the last twelve months for the first quarter of 2009 versus 2008. The majority of the down market percent is from the distressed real estate areas of the country. At the same time the majority of the country actually has received small to moderate decreases in price over the past year with seventeen markets currently up in prices for this year versus last year. (Home buyer reluctance because of fear for further price declines appears to be changing). The bottom line distressed properties are coexisting with a more normal market price in many communities around the country and are having the effect of skewing the numbers down. Western North Carolina has not experienced the number of foreclosures as in areas such as Miami, Las Vegas, and Southern California and consequently do not show similar real estate price decline. Western North Carolina (including Waynesville, Maggie Valley, Canton, Clyde, and Asheville) also did not experience the high market price appreciation that was the result of real estate speculations in those areas either.
The sales in areas that have experienced a large number of distressed properties and large price drops have increased dramatically in the first quarter of 2009 versus 2008. Nevada is up 117%, California is up 81%, Arizona is up 50%, and Florida was up 25%. Buyers in those markets are starting to recognize the home values that are now available to them. The decrease in unsold inventory in 29 major metropolitan markets saw a 3.6% decline in April versus March and for many of the markets, the major real estate selling season is just beginning. Declining inventory of homes for sale is normally considered a sign that market bottom may have been reached. A five to six month inventory of homes has normally been considered a stable real estate market, with a smaller months supply relating to the market heating up and a higher number of months supply relating to a slowing down market. The important thing is whether the inventory is increasing, decreasing, or stable.The market trend may also be hot for one group as is the case for first time buyers and slow for another group as would be the case for more expensive homes or move up homes.
New loan application also increased last week. The Mortgage Bankers Association said that the average thirty year fixed rate mortgage was back down to about 4.75% and loans with a fifteen year amortization rate were down to about 4.5%. The conservative criteria used for getting a loan continues to be a challenge for buyers with lenders that have Fannie Mae and Freddie Mac and this has been an impediment to the real estate market . These lenders are looking for larger down payments and higher FICO score than what was required during the boom years. The exception to this would be FHA insured loans and USDA still allowing low and no down payment programs.
The most important consideration for most real estate buyers with housing prices stabilizing is not government stimulus, or low interest rates, or even a low house prices, it is job outlook. If a buyer believes they are going to lose their job they will most likely not buy a home. The decreasing unemployment rate for the local area and the decreasing housing inventory are two indexes to watch as we continue to hope that the recovery has begun.
David Craven, Realtor
RE/MAX Mountain Realty