An end in site?

For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors®. And Cincinnati is no exception. Locally home sales (for the second month in a row) – topped sales from a year ago. Realtors sold 1,984 homes in July compared to 1,866 the previous July, for a 6.3% gain. In June, the year-over-year improvement was 1.3%.

What you may ask is driving these sales? To me it seems to be the current 8,000 Federal tax incentive to first time home buyers and buyers who haven’t owned a home in 3 years. This tax credit which is set to expire Nov 30 really seems to be pushing buyers to act quickly. This in conjunction with the low interest rates we are seeing these days (which now average 5.45% for a 30-year fixed-rate loan, compared to 6.68% a year ago). Its a perfect opportunity for people to get into a home at an affordable price with affordable payments.

Here’s the data:

Previous Month Home Sales Comparison

Closings       Gross Volume       Average Price

July 2009           1,984             $325,871,651          $164,250

June 2009          1,965             $323,555,305          $164,659

Variance           +1.01%              +0.01%                   -.25%

June Monthly Home Sales

Closings        Gross Volume      Average Price

July 2009           1,984              $325,871,651         $164,250

July 2008           1,866              $337,803,003         $181,031

Variance          +6.32%                   -3.53%              -9.27%

Year-to-Date Home Sales

Closings        Gross Volume      Average Price

Jan-July 2009    10,455         $1,556,542,759          $148,880

Jan-July 2008    11,390         $1,913,760,065          $168,021

Variance            -8.21%             -18.67%                -11.39%

We could all use some good news right?  Well Cincinnati, here you go - Home sales are up for the month of June when compared with June of last year.  According to a press release by the Cincinnati Area Board of Realtors ” Realtors sold 1,955 homes last month compared to 1,940 one year earlier. June sales were 16.6% higher than May, which recorded 1,677 sales.”    Paul Jacobs, president of the Cincinnati Area Board of Realtors, cited these three factors to explain the increase in June sales (closings)-  all 3 I tend to agree with and see them as driving factors in my increased business over the past few months…
1) Low home mortgage interest rates - June average was  5.62%. That compares to 6.50% one year ago. It is now 5.51%
2) Buyers realizing that home prices are at bargain levels - Depending on the neighborhood, a lot of homes are going for less than what the owners paid for them just a few years ago.
3) Stronger utilization of the $8,000 first-time home buyer’s tax credit - First time home buyers are feeling the crunch and know that time is of the essence to utilize this by Nov 1, 2009.

Before you go out and celebrate that the housing market is recovering and this is the beginning of the end of our recession - its not all sunshine and flowers out there.   Home prices for Cincinnati, overall, were 13% lower than June 2008.   This once again is very dependent upon the neighborhood.  Many of the areas I work in, haven’t seen that much of a decrease and some haven’t seen any decrease at all.  It depends on the neighborhood and the supply of homes available to the buyers out there.  Our local inventory is also shrinking - which means we are headed to a more ’stable market’ where the supply meets the demand (a balanced market is about 6 months of home sales) .  We moved to a market of about 7.19 months in June. That’s down from 8.47 months a year ago.  (A lower number means greater demand for current inventory.)

Overall, things seem to be starting to move.  At least in the lower price end of homes 100-200 range.  Once this inventory gets eaten up, we should hopefully start to see the higher priced homes move a lot quicker as well.

Here are some June stats for your viewing pleasure (taken directly from the CABR press release):

Previous Month Home Sales Comparison
Closings      Gross Volume      Average Price
June 2009                  1,955         $321,500,105         $164,450
May 2009                    1,677       $260,491,965          $155,332
Variance    +16.58%         +23.42%                   +5.87%
June Monthly Home Sales
Closings      Gross Volume      Average Price
June 2009                 1,955          $321,500,105        $164,450
June 2008                 1,940          $367,382,301       $189,372
Variance     +.77%                 -12.49%                -13.16%
Year-to-Date Home Sales
Closings      Gross Volume      Average Price
Jan-June 2009        8,460       $1,228,397,263       $145,201
Jan-June 2008        9,524        $1,575,957,062      $165,472
Variance    -11.17%               -22.05%                -12.25%