Media Reporting On Housing Market Can Lead Consumers To Wrong Conclusions
April 29th, 2007National wire service reports this week made local headlines; “Existing Home Sales Tumble”, “Consumer Confidence Also Slides”, “Economy to Near Crawl, Raising Fears of Recession”, “Declining U.S. Housing Market Seen as Main Culprit”.
When looking at the housing market from a national perspective, the headlines are accurate, however housing markets differ locally. Your market may be way down, way up, or level. It would be a mistake to make decisions about buying or selling a home based upon the performance of the national market. You should educate yourself about the current conditions within your local market.
A good example is the housing market in Springfield, Illinois. The Capital Area Association of Realtors (CAAR) released the sales figures for the first quarter of 2007 this week. The number of home sales did in fact decline by 8.1% compared to last year, however was the second best first quarter on record. If not for terrible winter weather in February, home sales would have been greater.
While generating the second best record for home sales the median sale price during the first quarter set a new record high of $93,900. The increase in home prices locally runs counter to the national market reporting a loss of 1.5% on the median price of a home.
Home listings pending closing are up locally by 8% heading into May. Data for pending sales is not available nationally. It appears to this veteran Realtor of over 20 years, that the local market has returned to normal, with the exception of the number of homes for sale.
The record inventory of unsold homes continues to be the major factor in our market. The number of homes listed with brokers hit 1700 active and available for sale for the first time this year on April 27, several hundred above average. Real estate has always been, and always will be, a supply and demand commodity. In 2006 a record 8000 plus home listings were available through CAAR, 50.8% sold and closed.
Through April 27, CAAR brokers reported 1110 closed home listings, 3% behind last years pace. A record 1090 listings were reported to have withdrawn or expired without a sale during their listing period. The year began with 1541 listings carrying over from 2006, and 2189 new listings added to that number by April 27. The 1110 closed sales means 29.7% of available listings have sold and closed. Another 13.9% are currently under contract, however on average, only 80% of pending listings close. That means about 41% of home sellers will have had success in getting their homes sold year to date.
Are the national and state housing markets different? Absolutely. Both are down significantly in both sales, and in home prices. Illinois home sales dropped 20% in March alone. When comparing the national market to the local market, it can be stated that the Springfield Illinois housing market is performing well above average. The market is not bad, simply very competitive for home sellers, and it is actually a good time to be a home buyer.
Sellers that get sold will be more price sensitive, and be willing to negotiate more openly. Interest rates remain extremely affordable keeping buyers in the market. The sellers with the best price, condition, and viable marketing plans will sell.
During the housing market decline last year, the local paper ran the negative national news every month with sensational headlines. This while the local housing market was performing at record levels in home sales. As the year progressed the negative psychology created by the press began to impact consumer views about the local housing market. The record pace at which Realtors were selling homes came to a screeching halt in November and December, causing CAAR to fall only 29 home sales short of the all time record. In my opinion the local media played a significant role in the slowdown. Why? Interest rates and unemployment were at near record lows, two important components of a good housing market.
My hope is that the local media would focus their articles on the current conditions within the local housing market, which are good. Families that want to buy or sell a home in Central Illinois aren’t concerned when the housing market is slumping in Arizona, California, Florida, or New York. The incessant reporting of negative national news again in 2007, could cause a repeat of the negative impact on home sales locally. Now that would be of interest to local families that must sell their homes. I wonder what would happen if the “Headline Editor” found themselves needing to sell their home?
