It's been a while since I have given an update because, quite frankly, it hasn't been real exciting to continue to report and that prices continue to decline. So what am I reporting today? The market is still sluggish and prices continue to decline.
There has been, however, some improvement in the pending sales (those not yet closed) of single family homes over the past four months. On a year to year basis those sales are 15% higher than last year. So that is good news of a sort. However, when we look closer at the numbers we see that the increase is concentrated at the lower end of the market, under $350,000, which is where the first time home buyers are shopping. Once you get above $350,000, the sales drop off dramatically and are still running about 30% behind the numbers for last year, which in itself was not a good year. Safe to say the $8000 taxpayer subsidy for first time home buyers seems to be having an impact, but that's about as far as it goes. To many of those purchases are of homes that are either short sale situations or foreclosures where the sellers of those homes are in no position to purchase another home, let alone trade up.
The pending sales of condos over the last four months are about the same as last year, so at least the situation is not growing worse. However, the sales are concentrated at the low end of the price spectrum, under $200,000. Above $200,000 it's still Death Valley Days for the condo market.
Right now we are hearing a lot of talk about the recession having ended, but from where we sit in your business it hasn't ended hear. Other than tax credit stimulated sales at the low end of the market, sales are not improving and prices are still going down. Before we can talk about price stability, we will need sales to improve about another 50% from their current levels. Not impossible, but it's hard to come up with the scenario where that will happen this year.
There has been improvement, but we need much, much more before prices firm up.
Showing posts with label single family. Show all posts
Showing posts with label single family. Show all posts
Saturday, August 8, 2009
Wednesday, April 15, 2009
A Glimmer of Good News, But Just a Glimmer
After months of nothing but negative news in the real estate market, the first 14 days of April have brought us some news that is not totally negative. This is what it has come to, new is that not totally negative is now good.
Although the closed sales of single family homes and condominiums still lag the figures from the sale time last year, 27% and 46% respectively, the new sales of single family homes in Monmouth County, those reported under contract for the month, are about the same as last year. Keep in mind last year was bad, so to say it hasn't gotten worse in the first 14 days of the month isn't saying much, but it's better than it's been for the first 90 days of the year. Also keep in mind that 14 days does not make a trend and the new sales of condos is still running 30% behind the first 14 days of April 2008.
People continually ask us if things are getting "better". By "better" most are asking about what the prices are doing. The short answer is they are still going down. People want to know when they will stabilize. They won't stabilize until sales improve to soak up the excess inventory that is putting the negative pressure on prices. Before sales can improve, the have to stop going down. The first 14 days of April, at least as it applies to single family homes, gives us a glimmer of hope that the sales may, and I say may, be bottoming out.
Once they bottom out, they won't necessarily start to improve but at least it is a step in the right direction. We will see what the rest of the month as to hold and then see what May, June and July have to offer. Keep in mind that a modest increase in sales will not fix the problem. The oversupply relative to demand is so great that sales will have to improve significantly to reach a point of price stability. But we have to start somewhere, and maybe this is the start.
Only time will tell. Keep your fingers crossed.
Although the closed sales of single family homes and condominiums still lag the figures from the sale time last year, 27% and 46% respectively, the new sales of single family homes in Monmouth County, those reported under contract for the month, are about the same as last year. Keep in mind last year was bad, so to say it hasn't gotten worse in the first 14 days of the month isn't saying much, but it's better than it's been for the first 90 days of the year. Also keep in mind that 14 days does not make a trend and the new sales of condos is still running 30% behind the first 14 days of April 2008.
People continually ask us if things are getting "better". By "better" most are asking about what the prices are doing. The short answer is they are still going down. People want to know when they will stabilize. They won't stabilize until sales improve to soak up the excess inventory that is putting the negative pressure on prices. Before sales can improve, the have to stop going down. The first 14 days of April, at least as it applies to single family homes, gives us a glimmer of hope that the sales may, and I say may, be bottoming out.
Once they bottom out, they won't necessarily start to improve but at least it is a step in the right direction. We will see what the rest of the month as to hold and then see what May, June and July have to offer. Keep in mind that a modest increase in sales will not fix the problem. The oversupply relative to demand is so great that sales will have to improve significantly to reach a point of price stability. But we have to start somewhere, and maybe this is the start.
Only time will tell. Keep your fingers crossed.
Monday, March 9, 2009
Real Estate Market Continues to Lag as we Move to Spring
The first two months of the year are behind us and the hoped for improvement in the Monmouth County real estate market has yet to materialize. The sales of both single family homes and condominiums are running significantly behind the figures for the same period last year and the inventory levels relative to demand, for both single family homes and condominiums are at staggering levels.
As bad as last year was, this year is shaping up to be worse. Through February the number of closed sales of single family homes was more than 30% behind 2008. Keep in mind that 2008 sales were more than 20% less than the 2007 figures. The news for condos is even worse. So far this year, sales figures for condos are more than 50% behind the figures of just one year ago.
As if this new wasn't grim enough, the Months of Inventory for both single family homes and for condominiums were averaging about 25 months in through February. Keep in mind that 6 months of inventory relative to sales is considered a price stable marketplace.
What can we expect as we move forward. Although California, Arizona, Nevada and Florida are the worst markets in the country, it looks like we are trying to catch up with them. So far all efforts made by the Government to stabilize the housing market have not had any measurable results. Expect prices to drop significantly as we move through the year. A figure of 1% per month would make sense, but it wouldn't be surprising if it were more.
When will the market bottom out and prices start to stabilize. Nobody knows the answer to that, but the guess here is that 2011 is the earliest we can expect that to happen. If you are thinking of selling and postpone the sale because you don't like today's prices, be prepared to wait at least 5 years, and quite possibly more, to realize a price significantly higher than today will bring you.
I know the news isn't good, but houses are being bought and sold. There is always value in the present and gambling on the future may prove to be a costly mistake.
As bad as last year was, this year is shaping up to be worse. Through February the number of closed sales of single family homes was more than 30% behind 2008. Keep in mind that 2008 sales were more than 20% less than the 2007 figures. The news for condos is even worse. So far this year, sales figures for condos are more than 50% behind the figures of just one year ago.
As if this new wasn't grim enough, the Months of Inventory for both single family homes and for condominiums were averaging about 25 months in through February. Keep in mind that 6 months of inventory relative to sales is considered a price stable marketplace.
What can we expect as we move forward. Although California, Arizona, Nevada and Florida are the worst markets in the country, it looks like we are trying to catch up with them. So far all efforts made by the Government to stabilize the housing market have not had any measurable results. Expect prices to drop significantly as we move through the year. A figure of 1% per month would make sense, but it wouldn't be surprising if it were more.
When will the market bottom out and prices start to stabilize. Nobody knows the answer to that, but the guess here is that 2011 is the earliest we can expect that to happen. If you are thinking of selling and postpone the sale because you don't like today's prices, be prepared to wait at least 5 years, and quite possibly more, to realize a price significantly higher than today will bring you.
I know the news isn't good, but houses are being bought and sold. There is always value in the present and gambling on the future may prove to be a costly mistake.
Saturday, February 7, 2009
2009 Starts Where 2008 Left Off
With a new year comes the hope of some good news, especially when it comes to the Monmouth County housing market. Sadly, this year has picked up where last year left off.
I would like to report that the January sales figures showed improvement from a year ago, but sadly, that is not the case. Hard is it is to believe the market continues to grow weaker, sales continue to decline and prices continue to fall.
There is a bit of a new wrinkle to January's sales figures. Last year the condo market some more strength, although you could hardly describe it as strong, than the single family market. The reverse now seems to be the case. In December 2008 and now in January 2009, the closings for condominiums plummeted. Condo closing in January 2009 were almost 60% fewer than for January 2008. The end result of this is that January ended with almost 27 months of standing condominium inventory. Remember, six months of inventory is considered a level that leads to stable prices. Twenty seven months can only mean one thing, look for condo prices to get hit hard in the the early part of the year.
The single family market continues to weaken, just not a dramatically. Closings reported for single family homes were off about 23% in January this year when compared against January last year. Keep in mind, sales of single family homes were off about 22% in 2008, so the latest figures give no indication that the market is bottoming out. Standing inventory for single family homes in January was just over 22 months. You know what that means for prices, down they go.
So far the incredible amounts of money that the government has thrown at the problem has had not visible effect. The focus continues to be on the supply side of the equation, but that would not appear to be where the problem lies. Right now there are only slightly more homes for sale around the county than there were in 2006. So why is there so much pressure on prices? Sales have plummeted.
If our government wants to approve things, they needs to focus on the demand side of the problem. Until there is a greater appetite for real estate, the situation will continue to be bad. I have to admit, as a veteran of 30 years in this business, I am getting tired of reporting the same distressing news month after month. I would like to be able to say there is a light at the end of the tunnel, even if it is a freight train coming straight at us. But there is no light, in fact we may not even be in a tunnel.
Hopefully things will improve soon. The government is about to pass the largest single expenditure legislation in the history of the world. Perhaps that will help. If it doesn't, watch out!
I would like to report that the January sales figures showed improvement from a year ago, but sadly, that is not the case. Hard is it is to believe the market continues to grow weaker, sales continue to decline and prices continue to fall.
There is a bit of a new wrinkle to January's sales figures. Last year the condo market some more strength, although you could hardly describe it as strong, than the single family market. The reverse now seems to be the case. In December 2008 and now in January 2009, the closings for condominiums plummeted. Condo closing in January 2009 were almost 60% fewer than for January 2008. The end result of this is that January ended with almost 27 months of standing condominium inventory. Remember, six months of inventory is considered a level that leads to stable prices. Twenty seven months can only mean one thing, look for condo prices to get hit hard in the the early part of the year.
The single family market continues to weaken, just not a dramatically. Closings reported for single family homes were off about 23% in January this year when compared against January last year. Keep in mind, sales of single family homes were off about 22% in 2008, so the latest figures give no indication that the market is bottoming out. Standing inventory for single family homes in January was just over 22 months. You know what that means for prices, down they go.
So far the incredible amounts of money that the government has thrown at the problem has had not visible effect. The focus continues to be on the supply side of the equation, but that would not appear to be where the problem lies. Right now there are only slightly more homes for sale around the county than there were in 2006. So why is there so much pressure on prices? Sales have plummeted.
If our government wants to approve things, they needs to focus on the demand side of the problem. Until there is a greater appetite for real estate, the situation will continue to be bad. I have to admit, as a veteran of 30 years in this business, I am getting tired of reporting the same distressing news month after month. I would like to be able to say there is a light at the end of the tunnel, even if it is a freight train coming straight at us. But there is no light, in fact we may not even be in a tunnel.
Hopefully things will improve soon. The government is about to pass the largest single expenditure legislation in the history of the world. Perhaps that will help. If it doesn't, watch out!
Friday, January 9, 2009
2008 Is Behind Us, Thank Goodness!
Now that the year is done, it is a good time to reflect back and also look forward. 2008 will go down as one of the toughest years in the Monmouth County real estate market since the late 1980's. The sale of single family homes was off about 22% from 2007 and prices declined as well.
Not all communities and not all types of homes felt the impact of the market equally. Those properties that fared the best were those with strong locations and those that were the newest or recently renovated. The condominium market showed more strength than the single family market, but the multi-family homes were hit hardest of all. We finished the year with the highest imbalance between supply and demand in the decade.
Where do we go from here? One thing seems certain, prices are going to continue to decline at least for the first half of 2009, possibly longer. There is just too much supply relative to demand to expect anything else to happen. So far the attempts by the government to stabilize the market have had little impact. Until such time as the demand for real estate improves, we will continue to have an oversupply of housing and declining prices. The demand for homes has declined about 40% from the levels of 205-2006.
We do have lower interest rates, about 5% on a 30 year fixed rate mortgage, and the lower rates will draw some into the market. However, the overhang of a weak economy will likely offset some of the upside of lower interest rates, leaving the impact of the rates to be marginal at best.
If you are buying, there are some tremendous values in the market, especially for first time buyers. If you are selling, the sooner you find a buyer the more money you are likely to see. No doubt you will be disappointed by the prices, but waiting will likely cost you more money.
This too shall pass, hopefully sooner rather than later. But for now, the market remains challenging and there is a chance we haven't seen the worst of it yet. Happy New Year!
Not all communities and not all types of homes felt the impact of the market equally. Those properties that fared the best were those with strong locations and those that were the newest or recently renovated. The condominium market showed more strength than the single family market, but the multi-family homes were hit hardest of all. We finished the year with the highest imbalance between supply and demand in the decade.
Where do we go from here? One thing seems certain, prices are going to continue to decline at least for the first half of 2009, possibly longer. There is just too much supply relative to demand to expect anything else to happen. So far the attempts by the government to stabilize the market have had little impact. Until such time as the demand for real estate improves, we will continue to have an oversupply of housing and declining prices. The demand for homes has declined about 40% from the levels of 205-2006.
We do have lower interest rates, about 5% on a 30 year fixed rate mortgage, and the lower rates will draw some into the market. However, the overhang of a weak economy will likely offset some of the upside of lower interest rates, leaving the impact of the rates to be marginal at best.
If you are buying, there are some tremendous values in the market, especially for first time buyers. If you are selling, the sooner you find a buyer the more money you are likely to see. No doubt you will be disappointed by the prices, but waiting will likely cost you more money.
This too shall pass, hopefully sooner rather than later. But for now, the market remains challenging and there is a chance we haven't seen the worst of it yet. Happy New Year!
Subscribe to:
Posts (Atom)
Posts
