Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.
Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.
NAR website August 24, 2010
Yikes! Wow! What does this mean, a double dip real estate recession, a real estate depression, the end of the world? (That was a joke, relax) NAR is powerful but not THAT powerful, yet. So let me chime in with my two cents. Double dip real estate recession, no; real estate depression; maybe; here’s my thinking. The positive outcomes in the real estate market last year were as a result of stimulus in the form of tax credits to first time home buyers and move up home buyers. Employment is still a huge Albatross around the neck of the economy. According to LocalTechWire as of August 23, 2010, North Carolina’s unemployment rate is a real 17.8% not 9.8% as reported by the State’s Employment Security Commission. With numbers like that there was NO recovery in real estate in 2008 and 2009. My telephone can bear up those facts too, it ain’t a ringing much.
My take, not a double dip real estate recession but rather a prolonged real estate recession or worse yet a real estate depression, but is this all bad? Well it is bad yes, but needed? Yes also. Here’s my reasoning. Like it or not, the cold hard reality is that our homes, for many of us that is, were NEVER worth what we paid for them or borrowed against them. Mind you this isn’t all homes, just a lot of them. The speculative markets, local markets like inside the Beltline condos, Chapel Hill homes, parts of Durham and new construction ACROSS THE BOARD, were highly inflated and had been so for a very long time. I dare say ten to twelve years or so.
In reality the $345,000 home in Cary, asking price, that I helped a client write an offer on this week, was never worth $345,000 that the sellers are asking today. Truly I think, that when they purchased this home twelve years ago, it wasn’t worth the $247,500 that they paid for it. I think that the home was most likely worth $225,000 when brand new, but because it was new they paid an inflated premium. Although it is a nice home, it is not of the highest quality, there is no real plywood and the home is going to need some significant work soon.
An easy over supply of inexpensive money artificially inflated the demand for housing and that artificial demand, born up by risky borrowers and Wall Street and crooks, created a fast growing bubble that is still in the process of deflating. With 8% of the active real estate inventory in Durham County being foreclosed and most likely an additional 8% to 10% being otherwise distressed or short sale, this coupled with a much smaller supply of QUALIFIED buyers and difficult banking regulations makes for a very sick housing industry. Is it terminal, no, but once recovered an industry that will never be what it once was in the heady to good to be true days of 2002, 2003, 2004 and 2005. So...hang on it’s gonna be a bumpy ride.
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