According to the National Association of Realtors, existing home sales rose unexpectedly in February, increasing 2.9 percent. It was the first increase in home sales in seven months.
Driving this increase were two factors: changes from January to February typically measure seasonal differences only, and the median sales price plummeted 8.2 percent from last year.
Home inventory remains high, with close to ten months of properties on the market.
As an Atlanta real estate lawyer, I have often counseled my clients not to read too much into the NAR’s statistics, or at least the NAR’s interpretation of their statistics.
But what conclusions can be drawn from their latest report?
First: housing is far from staging a recovery. While there was a modest increase in January to February sales, this is more likely attributable to seasonal factors, and not an actual improvement in the underlying market itself. In fact, sales of existing single-family homes were down 22.9 percent from a year ago. That’s a lot of houses.
Second: the drop in home prices as measured by the NAR has almost doubled from last month. January’s year-over-year prices fell 4.6 percent. February prices dropped 8.2 percent to $195,900.00.
It was recently reported that the majority of homeowners were in denial about home values, with three out of four believing that their home had gained or its retained value over the past year. The rapid decline in prices reported by the NAR may indicate that sellers are finally recognizing that homes aren’t worth what they used to be, and they are pricing more aggressively to compete with each other and the surging number of foreclosures.
These motivated sellers, who may be finally reducing prices drastically just to get homes sold, are your competition, and the successful investor is the one who is best able to turn market conditions to your favor.
Photo: down, originally uploaded by lomokev.