Recent media news reports trumpet that sales of existing homes plunged by 29 percent in July 2009. Is this the whole story… or is this the beginning of election year rhetoric? Further, do the national statistics have any bearing on how the real estate market is doing locally?
Home Prices Stabilizing – First, let’s put things in perspective. National Association of Realtors Chief Economist Lawrence Yun at his monthly press conference in Washington on August 24, 2010, pointed out that “One of the remarkable things about home sales today is the strength we’re seeing in the national median price.” He noted a resiliency in prices as a bright spot - a resiliency due to the equilibrium of prices to household income (including mortgage-payment to income) and the drop in new-home construction. Which is more important – number of sales or home values?
Consumer Confidence – With prices aligned with the economy and interest rates remain historically low (4.42 percent on average), what’s missing is consumer confidence, and that appears to be dependent in part on evidence that jobs are growing. Elections will be won or lost based on which party is able to communicate best whether we as a nation are gaining or loosing on the job front. Expect much more negative political media spin on the economy.
Saratoga Real Estate Sales – It is easy, but wrongheaded, to infer that national trends are the same as specific local markets. Take Saratoga, CA 95070 for example, where there were 25 closed detached home sales in July 2010 compared with 27 closed sales during July 2009. The average sales price of those homes in July 2010 was $1.880 million compared with $1.819 million during July 2009. Furthermore, those Saratoga sold homes were on the market and average of 44 days for July 2010 compared with 135 days for sold in July 2009!
To bring us even more up to date there were 29 closed sales in August 2010 in Saratoga, CA with an average price of $1.94 million. Hardly a market in decline and crisis!
A Crisis of Confidence – But we still have a crisis of confidence (whose analysis of facts to trust) – whether it be politicians, economists, stock brokers or real estate agents. Home buyers who just read, watch or hear national real estate trend sound bytes tend to think it is a buyers market everywhere and that things may get worse – which puts them at odds with home sellers who think they are already selling below what their property is worth.
I believe the most astute home buyers are seizing the opportunity to buy a home now at good a value.Â It takes careful research and local knowledge. I try hard to deliver facts and thoughtful interpretation of the local real estate market as I see it and to avoid over-optimistic Realtor spin. I wish we could trust our media as being unbiased.
What do you read in the tea leaves?