Home Prices Hit Lowest Mark in Nine Years
Yesterday, the National Association of Realtors® (NAR) announced that sales of existing (meaning non-new) homes declined 9.6% from January to February of this year. What's worse, February's median existing home sales price of $156,100 is the lowest mark the metric has hit in nine years, since the same month in 2002.
That's right, folks -- home prices have rolled back to where they were nearly a decade ago.This data was a punch in the gut of the real estate market, which had been steadily gaining in home sales activity three months running until February. The trade group's Chief Economist, Lawrence Yun, explained that the dynamics underlying these findings will cause the market to recover slowly, and in fits and starts.
"Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers," he said. "This tug and pull is causing a gradual but uneven recovery," Yun concluded.
Echoing the NAR's 'home prices are low' refrain, today the Federal Housing Finance Administration issued their own home price report, showing home prices down .3% from December to January, and down 3.9% from January 2010 to January 2011.
Although each of these reports may seem like another stab in the hearts (and net worths) of homeowners, for would-be buyers, they lift the sash on the window of opportunity to break into the housing market. And the data bears this out: NAR's report announced that 39 percent of all homes sold during February were distressed properties: foreclosures and short sales. And some new classes of buyers are already taking advantage of these highly affordable market conditions. A record-high 33% of homes sold in February were paid for in cash. Investors snapped up 19% of all homes sold in February, and first-time buyers accounted for 34% of home sales.
Given that Fannie Mae and Freddie Mac still seem to be on the chopping block, but they aren't likely to disappear for 5 to 7 years. In the meantime, some FHA lenders are loosening qualification guidelines and, as the new data shows, affordability is sky-high. If you want to buy a home anytime soon, you'll have a few years to get into the market and take advantage of these conditions.