If you watched the news last night or this morning, you probably saw reports about the latest Existing Home Sales data released by the National Association of Realtors for March. The media sure likes hyperbole — lots of verbs like ‘plummeting’ and ‘crashing’. I really wish they would put a little more thought into their analysis, but that wouldn’t quite fit into an attention-grabbing 30 second sound bite.
Yes, the real estate market is slower. We’ve known that for months. The market was peaking in early 2006, so current year-over-year numbers are a comparison against record activity. Nationally, the seasonally adjusted number of sales was down 11.9% in March over March, 2006. In the northeast, year over year sales were down 8%. But if you compare the annualized March sales (5,320,000) to the 5,677,000 for all of 2006, the annualized rate is down nationally by 6.3%.
The picture is slightly different, and better, in the northeast. Year over year, seasonally adjusted sales are down 8%. But the annualized March rate — 800,000 single family home sales — is actually up 1.6% from the 787,000 houses sold in the northeast in 2006, and only 4.6% down from the peak of 2005, when 838,000 houses in the northeast changed hands. Now, this performance is certainly down and indicates a pull back from the roaring market of the last few years. But I wouldn’t categorize it as ‘collapsing’ or ‘plummeting’.
In my experience, what I’m seeing is that houses that are attractive and well priced (which, in my opinion, is about on par with what they would have sold for in mid-2006) are selling. The biggest drag on the market I’m seeing is not a lack of demand on the buyer side, but a shortage of attractive, well priced inventory. Yes, there is a lot of inventory on the market, but a lot of sellers still have their heads in the clouds. More experienced agents, who’ve weathered previous market cycles, all tell me that it can take a year for sellers to get with the program when there is a market shift. But I gotta tell you, I’m getting impatient. Sometimes I wish I could just run around and put scarlet letters on the ‘For Sale’ signs in front of houses that I think are ridiculously overpriced.
You can check out the latest data yourself at http://www.realtor.org/Research.nsf/Pages/EHSdata