Midwest home resales post 6 pct annual increase
Monday, October 26th, 2009
KANSAS CITY, Mo. (AP) — Home sales in the Midwest increased in September as a soon-to-expire tax credit for first-time buyers and glimmers of an economic recovery brought more people to the closing table.
The National Association of Realtors said Friday that there were an estimated 110,000 resales in the Midwest, up 5.8 percent from September last year. The median sale price for the region fell 1 percent to $147,600, marking the smallest decline in the country.
Nationally, home resales rose almost 8 percent from a year ago, without adjusting for seasonal factors. The median sale price fell 8.5 percent to $174,900, the Realtors association said.
To varying degrees, economists and local housing experts say the federal tax credit has boosted sales. First-time buyers can receive a credit of 10 percent of the sales price, up to $8,000. The real estate industry is pushing for Congress to extend the credit past the Nov. 30 deadline.
“I do think we’re going to see some real solid gains in the third quarter in the Midwest” because of the tax credit, said David E. Clark, economics department chairman at Marquette University in Milwaukee, Wis. “You’ll see that everywhere but especially here in the Midwest where our homes are already very affordable.”
The jobless rate in the Midwest dipped from 10 percent in August to 9.8 percent in September, the only region to show a decline last month. But the rate is still up from 6.4 percent in September last year as automotive layoffs took their toll.
Eight of the 12 major Midwestern cities tracked in the Associated Press-Re/Max Monthly Housing Report, also released Friday, showed annual increases in sales in September while all but three showed median sale price declines. The report analyzed sales transactions in the metropolitan statistical areas recorded by all real estate agents, regardless of company affiliation.
Here are some of the highlights from the region:
— Biggest sales gain: Fargo, N.D., saw the number of sales jump 23 percent from a year ago. Meanwhile, median price declines were moderate, slipping about 3 percent year-over-year to $139,950.
While the city had to deal with devastating floods this spring, it has so far avoided the economic tumult of other markets, said Kimberly Van Hal, a real estate agent with Coldwell Banker-First Realty.
North Dakota’s unemployment rate was far below the national average last month at 4.2 percent, which was only about 1 percentage point above a year ago.
Van Hal said the tax credit has made up a large part of recent sales, especially as the market’s average home price is well within the range of first-time home buyers.
“We really picked up speed and have been a very active market since early summer,” she said.
— Biggest sales loss: Sales in Cleveland, Ohio, were the worst in the region, falling almost 12 percent from a year ago. The median sales price, however, was stable, gaining almost 2 percent to $116,000.
The manufacturing-heavy city has suffered numerous plant closures and layoffs in recent years. Last month, the state lost about 6,000 jobs but its unemployment rate actually improved, which experts said came from discouraged workers leaving the work force.
Paul Hazlett, a Century 21 agent in the Cleveland suburb of Middleburg Heights, said homes still sell quickly if they’re not overpriced but a lot of sellers remain unrealistic. He has a contract pending on a home where the sales price is $15,000 below what the owner paid two years ago.
“On the west side of Cleveland, I’ve almost given up on the area because I get tired of people getting mad at me when I say what I think their property is worth,” Hazlett said.
— Biggest price gain: Indianapolis led the region with the median sale price tiptoeing forward more than 4 percent year-over-year to $120,000. Overall sales, however, continued to fall, declining almost 10 percent from September 2008.
Sharron Hill, with Hill & Associates in suburban Indianapolis, said the market has not seen much permanent appreciation in home values because of an uptick in foreclosed homes and what she considers poor appraisals. A recent appraisal reduced the value of one of her listings by $20,000, which she blamed on lenders overcorrecting for the mistakes that led to the housing bubble.
“Changes in the mortgage industry in the last 8 to 12 months is hurting the real estate industry more than anything,” she said.
She said sales have also struggled but would be far worse without the tax credit bringing new people into the market.
— Biggest price decline: Detroit continued to lead in an unfortunate trend as the median sale price dropped almost 22 percent from a year ago to $65,000. The lower prices have brought in investors and bargain-hunters, however, and sales rose more than 3 percent last month.
The city, hammered by losses in its key automotive industry, has seen massive numbers of foreclosures and distressed sales, which typically sell at a significant discount and make it virtually impossible for conventional sellers to get anywhere near what they want for their homes. Michigan has also struggled with job losses, posting the nation’s highest unemployment rate of 15.3 percent last month.
Thomas Bush of Real Estate One in Shelby Township, Mich., a Detroit suburb, said he estimates fewer than 10 percent of homes going on the market these days are conventional sales and prices are back to 20-year lows.
“I don’t think we’ve seen what the auto problems are doing to the market in Detroit,” he said. “We’re seeing the effects of bad mortgages, bad choices. What happens when all the other stuff comes?”
— Inventory highlight: The number of unsold homes fell in every Midwestern city last month from a year ago, according to the AP-Re/Max report. Indianapolis, Detroit and Cleveland led the region, with inventory drops of more than 29 percent each. Wichita, Kan., had the smallest, shaving just 0.2 percent off its backlog.
Housing experts say reducing the existing inventory of unsold homes is key to sustaining a resurgence in home prices.
