These numbers will be the first indication if home sales and construction are at the bottom and could soon rise. Most Economists and industry expects expect to see in this week's numbers a confirmation that the swing has leveled.
For housing to recovery prices must stop falling. For Alameda we saw April of this year stop the slide of both median and average sale price. The concern is the month-to-month volume is small and variations in these numbers are easily manipulated by just a few sales.
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The news from Case-Shiller Home Price Indices Prices showed that the falling prices have not stopped, but have slow down. U.S. single-family homes fell 18.7 percent in March from a year earlier and 19.1 percent in the first quarter, the most in its 21-year history. Home prices have fallen 32.2 percent since peaking in the second quarter of 2006 and are at levels not seen since the end of 2002.
All 20 cities in the index showed monthly and annual price declines, with nine setting annual records. Fifteen cities posted double-digit drops and three cities — Phoenix, Las Vegas and San Francisco — all recorded declines of more than 30 percent.
Nationally an avalanche in the supply of housing has driven prices down and will keep a lid on prices even as demand rises. Six months of inventory is considered balanced and given the inventory levels the market still has a long road to recovery. Currently, national existing-home inventories are down to 9.8 months' supply, but off their recent peak of 11.3 months. In Alameda, using a four month median of sales, the Island is carrying a little more than seven months of inventory.
Last week we discussed a massive shadow inventory of bank- and investor-owned homes. This inventory could be enough to push existing-home supply pass 12-months. Based on the RealtyTrac numbers we reported last week a 192 properties have yet to hit the open market, that would push Alameda’s inventory beyond 15-months.
The states of Nevada, Florida, Michigan and California, also have unemployment rates above the national average, inhibiting demand. Many areas with big overhangs also are riddled with distressed sales, which comprise more than 50% of total sales in some metro areas of California, Arizona and Nevada.
As long as prices are falling, banks will take more losses, consumers will wait to buy.
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