Room for improvement – Numbers of sales are up, but average sale prices still lower
According to national news reports on the slumping housing market, January saw a second straight monthly drop in the number of new home sales across the nation. Year over year, most housing market experts agree that there is more activity in the housing market than there was a year ago at this time, but the recent national news on declining home sales is seen as a sign that the country’s economy is not yet recovering.
Here in Winthrop, recent data suggests the same tepid response.
According to MLS data obtained from local realtor Highland Real Estate, there are signs that the housing market is doing better than it was a year ago, when it bottomed out, but other indicators, such as the average selling price and the selling price to original asking price ratio, show that even those who have returned to the market seeking to buy a home have done so cautiously.
“When you look at the past four months of activity and compare it to the same period a year ago, there is definitely good news,” said Jim Polino, owner/broker of Highland Real Estate. “We are seeing a lot more transactions than we did a year ago, but the average sale process are still well below where they were prior to the recession and even lower than last year in some cases.”
An example of this mixed bag of good and bad news is that from November 2008 to February 2009, the Winthrop market saw just 12 single family homes sold. During the same period this year (Nov. 2009 to Feb. 2010) there were 26 single family homes sold. There was also an increase in the number of condominiums sold during that period year over, as 2008-09 saw 15 condos sold compared to 23 during the most recent four-month period.
Unfortunately, for property owners there has not been a corresponding increase in sales prices.
The average sale price for a single family home during the Nov. ‘08 to Feb. ‘09 period was $313,000. During the just completed Nov. to Feb. stretch the average single family home price was $288,000.
However, Polino pointed out that part of the reason for the lingering depression in sale prices is that most of the buyer that are actively looking in the market right now are first-time home buyers, who probably don’t have as much to spend.
“There really aren’t a lot of people looking to sell their home or condo and upgrade to a larger home at this point,” said Polino. “Most of what we’re seeing are first time home buyers, many of whom are looking to make a good deal on a home they know they will be able to afford.”
“It is also important to consider that those averages include short-sales and foreclosures that occurred during that period, and with only 26 transactions, it would only take a couple of foreclosures or short-sales to really skew the averages,” said Polino.
The number of homes and the amount of time they are on the market can also be a good gauge of local home buying trends. Fortunately, Winthrop has seen some consistency in its market over the past six months. In September 2009, there were 44 single-family homes on the Winthrop market and the average home sat on the market for 90 days. Last month, the Winthrop market showed 42 single-family listings, with an average time on market of about 94 days.
Another complicating factor in all of this is the looming expiration of federal income tax credits in April, which may cause the market to lose some of the little momentum it has been building over the past four to six months.
The existence of those tax cuts, coupled with low interest rates and low asking prices means that now is a good time to be looking for a home.
“I think there are reasons to be optimistic and if you ask people who are looking for a home, they’ll all tell you that they feel more confident about the economy than they did a year ago,” said Polino. “Most people seem to feel that the worst is over, that there will still be a long recovery ahead of us, but they no longer feel like we are in the middle of a catastrophe.”
Polino said that he does fear that the expiration of federal income tax credits for buying a new home will slow down some of the number of transactions after April. However, he also doesn’t think that the expiration of those tax credits will unwind the market completely.
“The most important thing is that we have to get unemployment under control again and get people back to work and spending money,” he said. “Any recovery is going to have to take place as part of an overall recovery in the economy.”