Wednesday, January 7, 2009

Alameda Real Estate Sees Small Decline in 2008; Nation Sees Big Drop

Yesterday was a real bad for real estate reports. First the National Association of Realtors (NAR) released Pending Home sales and they announced a record low, then later in the day a survey from the Corcoran Group, a New York brokerage firm, reported their little island Manhattan saw real estate sales plunged more than 40% in the fourth quarter to 2,500 units. The Manhattanites are used to over 6,000 sales in the last three months of the year.

So we look 2,907 miles to the west to our little island and see our sales are roughly flat. In the fourth quarter of 2007 we had 118 sales compared to 2008 with 105 closed transactions. This is an 11% change, but in the scope of total sales it is a small change. I wish I had the 2006 and 2005 data, I am sure it would be way down, to compare the sales totals.

Back to the NAR report: According to the National Association of Realtors, the Pending Home Sales Index fell to 82.3 for the month of November, to its lowest level since the series began in 2001, That's a drop from a downwardly revised reading of 85.7 in the month of October. The November index is 5.3% below the same month a year ago, when the Index stood at 86.9.

Lawrence Yun, NAR chief economist, said a weakening was inevitable. “Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November,” he said. “December’s housing market activity could be comparably lower due to ongoing problems in the economy, so a real estate-focused stimulus plan is urgently needed.”

This is very bad news and it will only get worse in December. Here in Alameda you can see that Real Estate inventory continues to decline and sales have drop. The Island recorded 451 sales in 2007, down 103 units from the prior year. It is hard to believe that it will continue to fall much lower. This is the number that we real need to focus in on. Sales impact local jobs (realtors, mortagage brokers), transfer tax, property tax and several other areas that if we do see the resale market rebound it can be a very tough year for the community as a whole.

To try and get housing to rebound, NAR is continuing to push for a housing bailout.

“There can’t be an economic recovery without a focus on housing. “It’s crucial for Congress and the new administration to move quickly to remove impediments and offer home buyers the incentives they need to tap into today’s historic low mortgage interest rates,” said NAR President Charles McMillan, a broker in Dallas-Fort Worth."

For the Island, our insulated world, we will continue to see pressure from the outside. As homes decline in other areas the become more affordable this creates pressure to push price down in Alameda. So many variables are connected to rebounding housing market (financial credit market, jobs, inventory, bank owned properties, ect.) that it is hard to see the light at the end of this train tunnel.

1 comment:

  1. I understand the concern in the larger economy and for current homeowners, especially those with risky loans and/or jobs at risk. However, for those of us who chose not to take on irresponsible financing, have a stable job, who have young children and a single income, the current housing situation is actually good news. We have been priced out due to grossly inflated home prices. The NAR states that the new administration needs to "offer home buyers the incentives they need to tap into today’s historic low mortgage interest rates." What would provide the greatest incentive is for prices to continue to drop.