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July home index leaves little to smile about

Every month, real estate people, financing professionals, homebuilders and many others wait with great anticipation for release of the monthly Case-Schiller home price index from Standard & Poor. 

 The index keeps track, on a month-by-month basis, of home prices across the country.

The most recent index report was released this week. And while everyone was hoping for a healthy uptick in home sales, what they got instead was more of the same.

Home prices in May (measured in 20 major cities) were down 4.5 percent from the same month a year ago. When compared to the previous month of this year, April, home prices were virtually unchanged.

 So what we have is a market that continues to sort of limp along at the same slow pace. No big drops to indicate additional troubles in the area of home prices; but no indications of additional market recovery, either.

Taken market-by-market, prices were up a bit in nine cities, and down a bit in 11 others. Unfortunately for those of us in this part of the country, homes prices were down 1.5 percent in Tampa Bay.

Why aren’t we seeing more recovery after such a long period of market weakness? Here’s a few possible reasons:

• The battle in Washington over raising the debt ceiling, and the inability of lawmakers to come up with some sort of strategy or plan – any plan – doesn’t do anything to inspire confidence.
• Because so many problems result from lax lending standards, the current lending standards are much tighter than before, and that keeps some buyers (even qualified buyers) out of the market.
• High unemployment rates (9.2 percent nationally) means thousands of people don’t have the incomes necessary for home purchases.
• The bad economy prevents the formation of new households. People forming new households are people in need of new housing.

 I posted a story a few days ago about the increase in cancelled real estate sales contracts. There are a number of reasons for cancelled contracts (tighter credit standards, tougher appraisals, general nervousness in the market), but whatever the reason, fewer executed contracts obviously means fewer sales.

Were you hoping for a little more optimism in this month’s Case-Schiller home price index? Okay, here are a couple of bright spots: 

• The inventory of homes for sale was 164,000 units, a little more than a six-month supply. That’s the lowest that home inventories have been in a long time. Once we fight through all this stagnant inventory of homes for sale, we’ll see a re-ignition of the new-home construction business, and that will mean new jobs and some good stimulation for the economy.
• The median home sales price for the month of June was up 7.2% for new single-family homes. That could be an indication that homes in the higher price ranges are starting to sell.

If you are a glass-half-full kind of person, the new monthly index figures are a little encouraging. If you are more of a glass-half-empty sort, then the index just means more of the same.

Tags: case-schiller, home prices, price index, real estate, Tampa Bay

“Where are Pinellas County home prices going in 2009?”

I didn’t make that question up. Some people find this blog by searching Google, and one reader from somewhere in Ontario found me by typing that very question into the Google search engine yesterday.
It made me think, “That’s more than just a Google search string; it’s a pretty basic question about what we may expect real estate-wise during the coming year. It’s a question that everybody wants answered.”
So here’s my answer: I have no idea.
I don’t think ANYBODY really knows where home prices will go in Pinellas County in the coming year, and that’s the problem. Uncertainty is everywhere right now, not just in the housing market but in every corner of the economy. We have many more questions than answers because we’ve never been in this position before — not for a very long time, anyway.
So, having no real answers, I’ll venture an opinion:
I think we are at or near the bottom. I have a couple of reasons for thinking that; for one thing, prices seem to be holding fairly steady and have been for some months after a period of free-fall. For another thing, first-time homebuyers are pretty active in the market right now, which tells me that young employed people are seeing value in the current marketplace. And third, investors are coming forth and buying properties, often with cash.
Those are all good signs. BUT, I don’t have to tick off the areas of uncertainties in the economy, inside and outside of the real estate market.
Anyway, I’m going to try to remember that question from that Ontario reader about Pinellas County home prices, and I’m going to post some stories on this blog throughout the year that respond to that question in one way or another.

Tags: home prices, pinellas county