Yesterday, the National Association of Realtors released the Existing Home Sales data for October. (Click here for statistics.) Then this morning, I opened my hotel room door to find the big headline on USAToday "Home Prices Plunge Further" in BIG letters. Not once in the entire article did the reporter mention regional differences, and only mentioned that there are a few markets where prices are holding — in the 3rd to last paragraph. And of course, they zeroed in on California, one of the real estate basket case states.
The big problem with this kind of reporting is that those headlines and scary numbers don’t necessarily reflect what’s happening in the northeast. True, real estate is experiencing a slowdown in the northeast like in other regions, but to nowhere near the same extent. Nationally, October sales were down 5.1% over Oct. 2006, but were actually up 1.3% in the northeast. On the price front, the median sales price for October was down 5.1% over Oct. 2006, but rose 1.3% year over year in the northeast. (To be fair, the year over year calculation is a little misleading, and the median in the region has dropped 12% from its peak in June. However, NAR doesn’t seasonally adjust sales prices. In primary homes there is usually a fall downturn after the spring/summer buying season, so for NAR data the only accurate comparison is really the year over year data.)
I know some folks are going to comment that the lagging downturn in the northeast is a function of the lengthier foreclosure process, and I’m sure that does have some impact. But I do think there are factors in the northeast that are going to help us weather this storm better than the overbuilt and high speculative areas in the south and west. I do think we’re going to see a further downturn here — I’m not a Pollyanna. I do think buyers right now need to be prudent and pay very close attention to value, and particularly features that historically support value. I’ve been singing that song since the spring.