Real Estate Slow Down Ongoing
So far this year, real estate sales are showing a cool down.
January sales dropped for existing homes for the fifth month according to the
National Association of Realtors. January sales on new homes also dropped 5
percent.
Lenders are reporting that mortgage payments are late as well.
Even with all that, though, home prices are still expected to rise 5 percent
this year, despite the apparent slowdown.
Patrick Newport, US economist for Global Insight said "January's
weak existing and new home sales numbers are the strongest evidence yet that
after five remarkable, record-setting years, the housing market is in decline."
For January, existing home sales fell by 2.8 percent, down 5.2 percent from
January of last year. Single-family homes for sale rose substantially--the highest
since 1986. According to Insight Economics, that's 34 percent higher than
just one year ago. Buyers are apparently wary.
Sellers are taking homes off the market, and reducing prices substantially
in an attempt to make that sale.
Builders are saying that they are seeing more cancellations of new-home orders,
more than just six months ago, per the National Association of Home
Builders. Many homebuilders are offering incentives to get their sales. They
are offering everything from televisions to swimming pools.
Most markets are reporting higher inventories, with fewer buyers. That, of
course, is good news for homebuyers. Sellers, on the other hand, aren't
faring so well.
Sales in the South are doing slightly better. Sales rose 2.6 percent from December
sales. Home sales were worst in the Northeast, dropping 10 percent. The Midwest
has seen a 7.7 percent drop, and the West a 3.5 percent drop.
The median price hasn't changed from December, it's still at $211,000,
but that is 11.5 percent higher than in January of 2005. People just can't
afford new homes.
It is apparent that there are homeowners having trouble paying their mortgages.
Homeowners who are 90 days or more past-due on their payments rose to 3.6 percent
in December, which is up 3 percent from March of 2005, according to Loan Performance.
Borrowers holding higher-interest loans, usually buyers with poorer credit,
have a delinquency rate of almost 10 percent.
Patricia Fuller
Real Estate Press