Compromised by the highest level of distressed homes in decades, home prices have fallen from their peak in August 2007. But now they’re beginning to reverse their downward trajectory, according to leading real estate organizations.
Not only have more states reported gains since the first quarter of 2009, but an increasing number of metropolitan areas reported higher prices, says the National Association of REALTORS®. In Q-1, 2010, 91 out of 152 metropolitan statistical areas, or MSAs surveyed by the NAR showed higher median single-family home prices year-over-year.
Twenty-nine MSAs showed double-digit increases, three were unchanged, and 58 MSAs had price declines.
To put the numbers into perspective, only 30 MSAs reported price increases in Q-3, 2010, and in Q-4, 2009, 67 MSAs reported price gains while 123 reported price declines.
Overall, home prices are still declining from the peak, but they appear to be stabilizing. The national median existing single-family price was $166,100 in Q-1, 2010, down 0.7 percent from Q-1, 2009, when the median was $167,300.
Distressed homes are typically discounted by 15 percent relative to traditional homes for sale, often due to deferred maintenance and other conditions. Distressed homes were approximately 36 percent of sold homes in Q-1, 2010.
The federal first-time and move-up buyer tax credit added about one million sales, since its implementation in mid-2009, says Lawrence Yun, chief economist for the NAR. While the credit ended April 30, 2010, qualified buyers with firm contracts before that date have until June 30, 2010 to close and take possession.
For that reason, price stability should remain steady. In addition, mortgage interest rates have fallen significantly following the end of the stimulus, which has encouraged home sales to continue.
Sales volume should also remain higher. In Q-1, 2010, sales volume was 11.4% higher at a seasonally adjusted rate of 5.14 million, than the 4.61 million sales rate in Q-1, 2009.
Online real estate community Zillow also noted positive changes in its latest Home Value Index. In March 2010, home prices were down 3.8% year-over-year, notes Zillow’s chief economist Stan Humphries, the “shallowest change in home values” since August 2007. Depreciation levels have leveled off since January after reaching a nadir in October 2009.
Distressed homes continue to impact prices, increasing in March from 0.11% from February’s level of 0.10%. Since then, RealtyTrac reports that foreclosures are flattening.
In an economic recovery, housing is a trailing indicator. Flatter prices, fewer foreclosures and steady volume are signs that housing is indeed recovering.
Blanche Evans is CEO of Evans Emedia, Inc. and publisher of The Evans Ezine. As an award-winning journalist, Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and twice recognized as one of the industry's most "Notables."