Tuesday, December 22, 2009

The Island Bucks National Sales Trend for November

Today the National Association of Realtors® reported another big gain in Existing-Home Sales as buyers respond to tax credit and lower home prices.

Much of the rush can be credited to the credit, as first-time buyers rushed to close sales before the original November 30 deadline for the recently extended and expanded tax credit.

In Alameda, because many buyers did not qualify for the tax credit, saw a sales surge in October. There was a big pull back from October to November as sales fell almost in half.

Nationally the current home sales remain at the highest level since February 2007 when they hit 6.55 million. Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.4 percent to a seasonally adjusted annual rate1 of 6.54 million units in November from 6.09 million in October, and are 44.1 percent higher than the 4.54 million-unit pace in November 2008.

Lawrence Yun, NAR chief economist, said the rise was expected. “This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead,” he said

In all, 4.4 million households are expected to claim the tax credit before it expires and balance should be restored to the housing sector with inventories continuing to decline. An NAR practitioner survey shows first-time buyers purchased 51 percent of homes in November, compared with an upwardly revised 50 percent of transactions in October.

In many markets in the United States the conditions are optimal for buyers in the current market. Inventories have steadily declined and are closer to balanced levels, three months of inventory, which indicate home prices in many areas are either stabilizing or could soon stabilize and return to normal appreciation patterns. For buyers they still have good choices, low mortgage interest rates, and now an expanded tax credit.

In Alameda, those conditions are not the same as the Nation. The Island inventory is very low and choices are few. The expanded tax credit will open up some additional buyers and could create a bidding situation on desirable homes.

Just like Alameda, the Nation’s total housing inventory at the end of November declined 1.3 percent to 3.52 million existing homes available for sale, which represents a 6.5-month supply at the current sales pace, down from an 7.0-month supply in October. Nearly all markets experienced a solid sales gain from one year ago; exceptions were in San Diego, Riverside, and Sacramento, where inventory shortages for lower priced homes are limiting sales.

The San Diego market is interesting to monitor, because part of the region are like Alameda. They have high median home prices and low inventory.

The national median existing-home price for all housing types was $172,600 in November, which is 4.3 percent below November 2008. In Alameda, we saw an 11 percent decline in median home price year-over-year; November 2008 the median was $587,000 compared to this year’s median of $520,000.

Alameda sales for 2009 are slightly behind 2008 totals through November.

The government intervention has spurred home sales I am just not sure if it is sustainable.

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