House Sales Witness Sharp Decline
Today we are talking about house sales, particularly nationwide figures. We don’t commonly care too much about national figures. It is vital that you go glance at your area numbers because real estate is a local business. However, sometimes the figures are so unbelievable that they need to be brought to your awareness.
According to the National Association of Realtors, pending home sales fell 30% in May from where they were in April. Granted, April was the finish of the tax credit deadline. So that had certain influence on the circumstances. We do not quite know what has happened from May to June.
Kevin and Fred were foretelling that this would happen as much as a year ago. Essentially, we have been borrowing buyers from the future. With the incentive tax credit offered by the government, loads of people resolved to buy houses earlier than they would have.
This is just like what occurred in the first half of the decade. The banks were lending money to almost any person that sought it. Buyers that weren’t necessarily qualified or weren’t prepared to acquire a property stepped forward and purchased properties. So, in both cases, there is going to be a wait time before home sales catch up.
The biggest pieces of this puzzle are inventory and home prices. Because sales are downcast and inventory is going to multiply, prices will absolutely dive.
With adjustable rate mortgages and their imminent resets, house owners will be taking a closer look at their mortgage and the home value. For some the payment will go down, but so will the value of their house. There is a solid potential for an increase in strategic default. We haven’t seen the worst of defaults, unemployment and short sales. The nastiest is yet to come.
We’ve had all of this feel good information with the last couple months of sales and pulling buyers from the future. We will be in a poorer position from a national standpoint than we ever were in 2007.
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