Great article that says it all!
How could I not have mixed feelings about this week's housing news? On the one hand, my self-congratulatory pat on the back feels fabulous: I was right. On Tuesday the National Association of Realtors released dramatic and disturbing data in the Existing Home Sales Report. In my post featured on Active Rain three days ago Home Prices Will Continue to Drop many commenters described local increases in closed sales prices over the past few months. Likely true...it would be hard not to show increased sold prices in 2Q 2010 versus 2Q 2009. But the national sales data for July 2010 shows a barely measurable price increase of .07% over July 2009.
The data also shows that median list prices are dropping -- sellers are lowering prices in response to agent and buyer feedback -- so the houses that do sell in the coming months will likely sell at lower prices. (see dynamic chart below for St. Charles, IL)
THE BAD NEWS: closed transactions fell 27% in July 2010 over July of 2009.The rapidly swelling inventory increased by 25% due to new listings and the drop in new contracts. The national absorption rate -- the time it would take to sell off the existing inventory -- increased from 8.9 months in June to 12.5 months in July. As the number of listings absorbed (closed sales) slows down, the total inventory is increasing due to new listings coming into the market. (chart enlarged below)
THE GOOD NEWS: The affordability index (percent of household income it takes to buy a home) is the lowest it has been in the past 30 years. Low interest rates and low purchase prices make it a great time to buy on a purely economic basis. And of course the personal reasons for home ownership always exist: a place to raise children, a safe place for your family, a place you can make your own changes....paint the walls...plant a garden....put down roots. (chart enlarged below)
Today offers a golden opportunity for the most professional and knowledgeable real estate agents to provide leadership to their clients and the community.
Good agents can deliver good news. Great agents can deliver bad news.
The News For Sellers: your home must be compellingly priced, it must be in the best possible condition, it must show well -- staging is now a "must do", and it must be aggressively marketed by a broker who can and will use every tool in the arsenal. Now is the time for your listing agent to go to work!
For News for Buyers: consider the affordability index and if you can get a loan, buy today. If you wait for prices to drop further and interest rates go up, the value of the lower purchase price will be wiped out by higher payment. Get out there and look for the perfect house at the perfect price today. Now is the time for your buyer's agent to go to work!
So as we say in our office..it's time to pull on our big girl panties, arm ourselves with local data and analysis, and then get out there and lead.
SINGLE FAMILY HOME PRICES AND INVENTORY IN ST. CHARLES, IL
(use the slide bar on lower right to change time frames).
This post was written by Leslie Ebersole of Baird & Warner Real Estate.
If you would like more information about the Chicago Western Suburbs and the Fox River Valley
St. Charles, Geneva, Batavia, Wayne, Elburn, and South Elgin