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REALTOR(R): As January Existing-Home Sales and Median Price Fall, Favorable Time for Buyers

Existing-home sales declined nationwide in January with some buyers waiting to see how details of the economic stimulus package would affect them, according to the National Association of Realtors®. At the same time, inventories fell to a two-year low. While hesitation among buyers is understandable, REALTOR® officials say opportunities for them abound.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 5.3 percent to a seasonally adjusted annual rate of 4.49 million units in January from a level of 4.74 million units in December, and are 8.6 percent compared with January 2008.

Lawrence Yun, NAR chief economist, said there was understandable hesitation by some home buyers. “Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus,” he said. “The housing market will soon get a lift from very favorable buying conditions – not only from improved affordability, but also from the stimulus of an $8,000 first-time home buyer tax credit, and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates.”

NAR estimates the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package. Inventory is expected to fall below an 8-month supply by the year end, which would be consistent with home price stabilization.

A high prevalence of distressed home sales, and of those in lower price ranges, has skewed the median price to be markedly lower than under normal market conditions. The national median existing-home price for all housing types was $170,300 in January, down 14.8 percent from a year earlier when the median was $199,800; the median is where half of the homes sold for more and half sold for less.

Significant local market variations, however, continue. “A majority of markets experienced sales declines of more than 20 percent from a year ago, but some markets appeared to have reached the tipping point of accelerating home buying,” Yun said. “For example, home sales in Las Vegas have more than doubled with some reports of multiple bids.”

Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®, and a REALTOR® with Alain Pinel Realtors in Palo Alto, said buyers who are sitting on the fence should seriously consider conditions these days are favorable for them. “If you are seriously contemplating buying a home for the long-term, now is a good time to do so since interest rates are still favorable and buyers these days are in the driver’s seat and can negotiate. Many buyers are waiting for the market to ‘hit bottom,’ but don’t realize interest rates may change and by that time, their window of negotiation will be narrower as sellers will have more control over negotiations.”

DataQuick real estate information service reported in the Bay Area, home sales rose above a year ago for the fifth consecutive month in January, and while home buying remained slow in pricier coastal markets, but was robust in many inland areas where steep price declines have boosted affordability and, in some cases, driven sales of existing houses to record levels. A total of 5,050 new and resale houses and condos closed escrow in the nine-county Bay Area in January, up 40.8 percent from the same period last year. The median price paid for all new and resale houses and condos combined in the nine-county Bay Area fell to $300,000 last month, down 9.1 percent from $330,000 in December and down a record 45.5 percent from $550,000 in January 2008.

NAR reported regionally, existing-home sales in the Northeast dropped 14.7 percent in January, and are 23.8 percent lower than January 2008. The median price in the Northeast was $228,200, down 14.7 percent from a year ago. Existing-home sales in the Midwest fell 5.7 percent in January and are 16.7 percent below a year ago. The median price in the Midwest was $138,100, which is 6.8 percent lower than January 2008. In the South, existing-home sales declined 5.7 percent in January, and are 15.9 percent below January 2008. The median price in the South was $152,100, down 7.4 percent from a year earlier. Existing-home sales in the West were unchanged in January and are 29 percent stronger than a year ago. The median price in the West was $220,000, which is 25.5 percent below January 2008.
 

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, e-mail , or phone (408) 200-0109.

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