Pending home sales fell nationwide in April, fueling concerns of a double dip in the housing market. The National Association of REALTORS® reports the Pending Home Sales Index (PHSI) dropped 11.6 percent to 81.9 in April from a downwardly revised 92.6 in March. The index is 26.5 percent below a cyclical peak of 111.5 in April 2010, when buyers were rushing to beat the contract deadline for the home buyer tax credit. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
NAR's chief economist Lawrence Yun explained the dip in contracts may be due to temporary factors. "The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims," Yun said.
Tight credit is the primary factor holding back the market, according to Yun. "We simply have to get back to sound, common-sense lending standards to provide mortgages to creditworthy borrowers who are buying homes well within their means," Yun said. "Bank balance sheets show rising cash reserves and declining loan balances – it's time to loosen the purse strings."
Gene Lentz, president of the Silicon Valley Association of REALTORS®, said sales under contract also dropped in the Silicon Valley region, but the first quarter data showed gains when compared with the same period last year. Inventory was down in most parts of the region, but single-family home sales and their median sales price in a number of neighborhoods rose in the first quarter compared to last year.
According to information from MLSListings Inc., the Multiple Listing Service of the Silicon Valley Association of REALTORS®, in 2011 Q1 there were 83 closed sales of single-family homes in Los Gatos, up from 49 in 2010 Q1; Saratoga, 43, up from 38; Cupertino 68, up from 59; Sunnyvale 111, up from 96; and Palo Alto 80, up from 72.
The median sales price of a single-family home in Los Gatos in 2011 Q1 was $1,100,000, up from $1,002,500 in 2010 Q1; Cupertino, $1,122,500 from $1,100,000; Los Altos, $1,592,500 from $1,521,500; Mountain View, $890,000 from $867,500; and Sunnyvale, $773,000 from $755,000. The median sales price declined in Saratoga from $1,599,900 in 2010 Q1 to $1,410,000. In Palo Alto the median sales price dropped slightly from $1,436,785 to $1,400,000 in 2011 Q1.
Despite talk of a double dip, Lentz says local REALTORS® believe home prices will rise because of the region's prime location and assets. He also reminds buyers, "We need to return to the basics of home ownership – to buy because of the personal benefits that owning a home will bring to us. Like our parents before us, the value of home ownership lies in having a place to call our own, to decorate and do as we please, in settling down in a community where our children can grow up and play with other youngsters in the neighborhood, where we can make memories and have some stability."
"I still believe home ownership is a safe, secure way to build long-term wealth, but one should never buy a home solely for the purpose of making a pile of money," Lentz added.
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.
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