House Sales Realize Sharp Decline
Today we are chatting about home sales, in particular national figures. We don’t typically care too much about nationwide figures. It is crucial that you go peek at your area numbers because real estate is a local industry. However, sometimes the figures are so incredible that they have to be brought to your focus.
According to the National Association of Realtors, pending property sales fell 30% in May from where they were in April. Granted, April was the conclusion of the tax credit deadline. So that had certain effect on the circumstances. We don’t quite know what has happened from May to June.
Kevin and Fred were foretelling that this would occur as much as a year ago. Essentially, we have been borrowing buyers from the future. With the incentive tax credit offered by the government, tons 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 about any person that wanted it. Buyers that weren’t necessarily qualified or weren’t prepared to purchase a property stepped forward and bought houses. So, in both cases, there is going to be a delay time before property sales catch up.
The largest pieces of this problem are supply and home prices. Because sales are down and inventory is going to amplify, prices will definitely plunge.
With adjustable rate mortgages and their pending resets, home owners will be taking a closer look at their mortgage and the property value. For some the payment will go down, but so will the value of their home. There is a glaring potential for an increase in strategic default. We haven’t seen the worst of defaults, unemployment and short sales. The worst is yet to arrive.
We’ve had all of this feel good news with the last few months of sales and pulling buyers from the future. We will be in a worse position from a national viewpoint than we ever were in 2007.
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