January existing home statistics were released with some interesting and revealing trends. The best part about the numbers is they reveal promising trends for investors. The inventory of unsold homes increased 5.5% from December 2007 to January 2008. Inventory levels from January 2007 to January 2008 were up 18.4%. That means there are a lot more houses available for sale now then there were a year ago. What does that mean for investors? More motivated sellers. It is more difficult to sell a house now, so when someone has to sell, for whatever reason, they have to be more willing to negotiate and reduce the price in order to get the property sold.
Mark Lieberman, a Senior Economist for Fox Business Network said “With inventories of unsold increasing—and likely to go up further with higher foreclosure rates-sellers will be under increasing pressure to lower prices…..�
Further, Joel Naroff, chief economist at Naroff Economic Advisors said “With sales weak and inventories at extraordinarily high levels……Eventually, sellers will end their denial and realize that if they want to unload their homes, they will have to cut prices even more.”
As investors, we want to make sure we are not the ones getting stuck with property. With it being more difficult to sell properties, we need to make sure we are buying our properties right so that we are able to get them back on the market at a price where they will sell.
Also, those of you in the Northeast received good news on existing home prices. The median price of a home in the Northeast increased 6.2% from December 2007 to January 2008 and 3.1% from January 2007 to January 2008. I’ve included the raw sales and pricing data for your review below.
Regional sales (Seasonally adjusted annual rate):
• Northeast: 810,000 down 3.6% from December, down 25.7% from January 2006;
• Midwest: 1,200,000 up 3.4% from December, down 20.0% from January 2006;
• South: 1.950,000 down 0.5% from December, down 22.0% from January 2006;
• West: 930,000 down 2.1% from December, down 28.5% from January 2006.
Regional median prices:
• Northeast: $270,800, up 6.2% from December, up 3.1% from January 2006;
• Midwest: $154,200, down 3.0% from December, down 4.0% from January 2006;
• South: $164,300, down 4.6% from December, down 5.9% from January 2006;
• West: $300,100, down 3.5% from December, down 6.7% from January 2006.
Posted by Carter Brown
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