Wayne thinks…

YEAR-TO-DATE & MAY 2008 HOME SALES

May home sales were behind May a year ago by 30 percent, but we do have some good news.  Inventory is below where it was a year ago, and average prices and median prices were up in May compared to a year ago.  Also, total sales increased 10.6% from April to May 2008.    

Stories about the economy get air time, especially if it’s bad news.  The effect is cumulative.  Washington Post columnist Neil Irwin says Americans are “gloomier than the economy”.  In his June 18^th article he reports consumer confidence is at its lowest level in almost 30 years.  Only 12 percent of Americans think the economy is in good shape.  He goes on to say that the Internet is filled with opinion columns comparing today with the Great Depression.  Amazing! 

Mr. Irwin’s response to this gloom is right on target: “The economy is NOT all that grim.”  He says business is “holding up better than it did during the last two recessions in 1990 and 2001.  Employers haven’t shed as many jobs, the unemployment rate is still relatively low, and gross domestic product has kept rising. Things are no where near as bad as they were in the Great Depression, or even during the severe recession of 1982-1983.  The last time consumers were this miserable (May 1980) the jobless rate was 7.5 percent and inflation was 14.4 percent.  Today these numbers are 5.5 percent jobless rate and 4.2 percent inflation.”   

In summary he warns that negative attitudes can become a self-fulfilling prophecy.  It’s a matter of perspective or outlook.  “We have gotten so used to things being good…that even when conditions become somewhat bad, it feels terrible.”  

We are listing and selling houses.  Birmingham MLS members have sold nearly 5,500 homes since the first of the year.  Don’t compare this year with last year or the year before because 2006 and 2007 were record sales years for our MLS.   

Last year’s sales in May were record-breaking.  May 2007 was a huge month for home closings…the best May in history.  This makes it more difficult, having to compare this May with May 2007 numbers.  

May sales are 10.6% ahead of April sales.  Home sales usually increase from April to May and this year is no exception.  

Current conditions are ideal for buyers.  Prices have moderated.  Year-to-date average prices in MLS show a 1.6% decrease.  These conditions won’t last long.  Now is a great time to make an offer on a home.  

Inflation fears are in the news.  Despite the fact that interest rates are low; sellers are motivated; and prices have moderated, many buyers are still sitting on the fence, waiting for things to “bottom out.”  Inflation fears are in the news.  Waiting is a risky game.  If monetary policy shifts to combating inflation, mortgage rates may go up.   Now really is the time to buy.

Mortgage loans are available. Contrary to perceptions, conventional mortgages are widely available.  

Inventory is wide-ranging with many choices in prices and architectural styles. 

Home ownership is the best investment. Home ownership has been – and continues to be – one of the best investments.  Nine out of ten Americans consider home ownership to be a sound financial decision.  Real estate has delivered the most consistent positive return over any other investment over the last 40 years.  

YEAR-TO-DATE Statistics:

 2008 Total Sales: 5,449

2007 Total Sales: 7,372

Difference represents a 26% decline

 2008 Average Price: $193,563

2007 Average Price: $196,746

Year-to-date comparison shows a 1.6% decline in average price

 2008 Median Price: $158,600

2007 Median Price: $157,900

No significant % difference

 2008 Average Days on Market: 105* adjusted to exclude new construction

2007 Average Days on Market: 94* adjusted to exclude new construction

 YEAR-TO-DATE REGIONAL STATS: NORTH

2008 Total Sales: 401

2007 Total Sales: 467

Difference represents a 14% decline

 SOUTH

2008 Total Sales: 2,585

2007 Total Sales: 3,587

Difference represents a 30% decline

 EAST

2008 Total Sales: 1,468

2007 Total Sales: 2,028

Difference represents a 28% decline

 WEST

2008 Total Sales: 995

2007 Total Sales: 1,290

Difference represents a 23% decline

 MAY Statistics:

 2008 Total Sales: 1,277* Fewest closings for a May reporting period since 2002

2007 Total Sales:  1,836* Most closings ever for a May reporting period

Difference of 559 sales or a 30% decline

 2008 Average Price: $205,371

2007 Average Price: $202,800

Represents a 1.3% increase

 2008 Median Price: $172,400

2007 Median Price: $164,300

Represents a 5% increase

 2008 Average Days on Market: 100* adjusted to exclude new construction

2007 Average Days on Market: 93* adjusted to exclude new construction

 RESIDENTIAL INVENTORY IN MLS:

 YEAR/MONTH:      TOTALS FOR SALE:

 2008:

May                  12,458             

April                  12,365

March               12,121

February           11,919

January             11,757

 2007:

December         12,642

November          12,979

October             13,438

September        13,560

August              13,582* highest recorded

July                  13,477

June                 13,294

May                  13,183

April                  12,895

March               12,524

February           10,840

January             10,330

 2006:

December         10,755

November          10,687

October             10,974

September        11,079

August              10,747

July                  10,504

June                 10,355

May                  9,771

April                  9,741

March               8,307

February           7,982

January             7,661

These statistics compare total residential sales for May 2008 vs. May 2007 as well as Year-to-Date statistics as compiled by the Birmingham Area Multiple Listing Service, Inc. of the Birmingham Association of Realtors®.

Neither the Birmingham Association of Realtors® nor its MLS guarantees or is in any way responsible for its accuracy.  Any market data maintained by the Association or its MLS does not necessarily include information on listings not published at the request of the seller, listings of brokers who are not members of the Association or MLS, unlisted properties, rental properties, etc.  

I committed to an occasional communication with you to keep you abreast of current market conditions.  To those of you who are still waiting for buyers, and are asking me, “What are the market conditions, how long are homes sitting on the market, and when will I get a buyer?” all I can do is report to you on what is actually, factually, statistically happening in our area.  To that end, the information below has been condensed from a quarterly brokers’ report that I receive from the Birmingham Association of Realtors® and I invite you to look at the information, particularly the stats at the end.

 

FIRST QUARTER 2008 HOME SALES REPORT  

Excerpts from A Message from Hal Tillman, President of the Birmingham Association of Realtors®.

 

 You’ve most likely heard the expression “when the going gets tough, the tough get going.” But do you know who first said it? It was Joseph P. Kennedy, the father of President John F. Kennedy. Since the day he uttered those words decades ago, they have come to represent a universal motivational statement, or even a call to action.

BAR leadership is working to assist you during the “tough going” we are all experiencing right now. And we’re “getting going” on new ways to help BAR membership continue to be successful in our industry.

 

 Perhaps you’ve noticed the new addition of full page articles in recent editions in the Sunday Section of The Birmingham News. Interviews with REALTORS®, mortgage professionals, appraisers, and other BAR Affiliate Members have enlightened readers on today’s market. To further bring the real estate experience into full view for readers, interviews with “real life” buyers and sellers have also been included. This residential section …gives us an opportunity to share ideas and information with potential buyers and sellers.

 

The National Association of Realtors® is spending millions of dollars on a nationwide ad campaign. Maybe you’ve seen and heard some of these ads. The Birmingham Association of Realtors® has designed a local ad campaign for the Birmingham market that is airing now and in the upcoming weeks on Fox 6 and NBC13.

 

 The first Brokers Meeting of 2008 is set for May 1st. Planned is a panel discussion among representatives from different areas from our industry including brokers, appraisers, loan agencies, and others. Our goal is to help the various areas of real estate understand how changing factors in their businesses affect change in real estate sales. By giving all these professionals a chance to connect, we can then share what is learned with residential sellers. Ultimately we hope sellers will begin to estimate the value of their homes based on the changing pre-qualifications and expectations of today’s potential buyers.

 

During this meeting we’ll also discuss the benefits of our ever-changing MLS technology, and how it can work for you to bring the buyer and seller together in today’s challenging market.

 

 Now more than ever, when the going gets tough is when the public needs a REALTOR® to guide them through the buying or selling process – or both! We’re dedicated to our customers and to our industry. We’re a cut above the rest because we adhere to a strict Code of Ethics. In fact, this is the year that all REALTORS® must complete Mandatory Quadrennial REALTORS® Code of Ethics training.

 

 - Hal Tillman, President

 

 

FIRST QUARTER 2008 HOME SALES REPORT (Continued)

 

Home sales are down compared to a year ago. Consumer confidence has waned. Buyers are sitting on the fence, taking a “wait and see” attitude. Sellers are frustrated that they don’t see more showings, much less more offers, and they are looking to their REALTOR® for answers.

 

How are you responding to this challenge? Are you moping; are you coping; or are you hard at work at finding ways to succeed in today’s real estate market?

 

BAR President Hal Tillman has outlined, above, the many ways the Birmingham Association is working to assist each member to stay connected with information, tools and resources available

to us through our Association.

 

In addition, the NATIONAL ASSOCIATION OF REALTORS® has produced a public relations campaign…to help REALTORS® change public perceptions about the vitality of the real estate market, and to reach out to those homebuyers who are on the fence. The campaign provides tools and resources to influence buyers who have been discouraged by pessimistic messages in the media, and it offers guidelines for reaching out to the local media, to friends,

neighbors and to community groups.

 

 Here are some of the key themes in the campaign:

1. Current conditions are ideal for buyers. Prices have moderated. Interest rates are approaching 40-year lows, remaining nearly 1.5% lower than they were in 2000.
2. Mortgage loans are available. Contrary to perceptions, conventional mortgages are widely available for the majority of today’s homebuyers.
3. Inventory is wide-ranging with many choices in prices and architectural styles.
4. Home ownership is the best investment. Home ownership has been – and continues to be – one of the best investments. Nine out of ten consumers consider it to be a sound financial decision. Given the leverage in purchasing a home, the average return on a 5% down payment over 10 years is usually three to five times greater than stock market returns. Real estate has delivered the most consistent positive return over any other investment over the last 40 years.
5. Current market conditions won’t last. Price declines will eventually come to an end. Research shows that prices are beginning to stabilize. We must be conservative however in our estimates about 2008. This is going to be an unusually difficult sales season. A modest increase in values is expected but not until in 2009.

 

The statistics below are a compilation of all areas and price ranges.  Depending on where your home is located and the price range into which it falls, the statistics could vary greatly, but these will give you an overall idea of how our market is faring:

 

MARCH Statistics:

 

2008 Total Sales: 1162

2007 Total Sales: 1647

Difference of 485 sales or a 29% decline

 

2008 Average Price: $195,950

2007 Average Price: $193,800

Difference represents a 1% increase

 

2008 Median Price: $159,900

2007 Median Price: $158,000

Difference represents a 1% increase

 

2008 Average Days on Market: 104

2007 Average Days on Market: 111

 

RESIDENTIAL INVENTORY IN MLS:

 

YEAR/MONTH: TOTALS FOR SALE:

 

2008:

March 12,121

February 11,919

January 11,757

 

2007:

December 12,642

November 12,979

October 13,438

September 13,560

August 13,582* highest recorded

July 13,477

June 13,294

May 13,183

April 12,895

March 12,524

February 10,840

January 10,330

 

 2006:

December 10,755

November 10,687

October 10,974

September 11,079

August 10,747

July 10,504

June 10,355

May 9,771

April 9,741

March 8,307

February 7,982

January 7,661

 

FIRST QUARTER Statistics:

 

2008 Total Sales: 3018

2007 Total Sales: 3971

Difference represents a 24% decline

 

2008 Average Price: $188,900

2007 Average Price: $195,183

First Quarter comparison shows a 3.2% decline in average price

 

2008 Median Price: $155,000

2007 Median Price: $156,700

First Quarter comparison shows a 1% decline in median price

 

2008 Average Days on Market: 109

2007 Average Days on Market: 110

 

REGIONAL STATS:

 

NORTH

2008 Total Sales: 235

2007 Total Sales: 239

Difference represents a 1.6% decline

 

SOUTH

 

2008 Total Sales: 1370

2007 Total Sales: 1938

Difference represents a 29% decline

 

EAST

2008 Total Sales: 839

2007 Total Sales: 1117

Difference represents a 25% decline

 

 WEST

2008 Total Sales: 574

2007 Total Sales: 672

Difference represents a 15% decline

 

These statistics compare total residential sales for March 2008 vs. March 2007 as well as Year-to-Date statistics as compiled by the

Birmingham Area Multiple Listing Service, Inc. of the Birmingham Association of REALTORS®.

 

Neither the Birmingham Association of REALTORS® nor its MLS guarantees or is in any way responsible for its accuracy. Any market

data maintained by the Association or its MLS does not necessarily include information on listings not published at the request of

the seller, listings of brokers who are not members of the Association or MLS, unlisted properties, rental properties, etc.