Archive for May, 2010
Home ownership costs in Canada climbed for a third straight quarter and affordability is expected to erode through this year and into next, according to a report on Tuesday by Royal Bank of Canada (RBC).
The RBC Housing Affordability measure for the first quarter of 2010 showed that home ownership costs had risen across all housing segments the bank tracks as a robust property market in Canada pushed up prices.
National house prices fell 3.2% in Q110 from the previous quarter, but remain 2% above year-ago levels, according to the latest Standard & Poor's (S&P)/Case-Shiller House Price Index (HPI).
It marks a continuance of the trend began in April's HPI, when national house prices made their first annual increase in three years.
"Housing prices rebounded from crisis lows, but recently have seen renewed weakness as tax incentives are ending and foreclosures are climbing," S&P/Case-Shiller authors said in a report today (download here).
In March, the 10-city and 20-city composites recorded 3.1% and 2.3% growth over last year, pushing the national index higher than last year (illustrated above). In March, 13 of the 20 metropolitan statistical areas (MSAs) and both monthly composites declined although the composites and 10 MSAs showed yearly appreciation.
Average house prices are now at similar levels last seen in spring 2003.
“The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices,” says David Blitzer, chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover."
The 10-city and 20-city composites are down for the sixth consecutive month.
“While year-over-year results for the National Composite, 18 of the 20 MSAs and the two Composites improved, the most recent monthly data are not as encouraging," Blitzer added. "It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices. Now that the tax incentive ended on April 30th, we don’t expect to see a boost in relative demand.”
Write to Diana Golobay.
The National Association of Realtors (NAR) released some exciting news this week — exciting to them, at any rate.
The US government tax credit motivated more homebuyers to come to the closing table in April, with existing-home sales rising 7.6% to 5.77m units, up from 5.36m in March. That's up 22.8% from last April.
NAR chief economist Lawrence Yun put the cause of the increase squarely on the federal government, warning that volume will fall in the months immediately following the expiration of the tax credit inducement. He is undoubtedly right because we all know that real estate agents don't sell properties; the federal government does. Agents show properties, and that's something totally different.
Yun admits that there are other factors that are currently supporting the market, including stabilizing home prices, an improving economy and mortgage rates that just can't seem to rise above historic lows. But despite all of that, he is quoted in the NAR press release saying, “no doubt there will be some temporary fallback in the months immediately after (the tax credit) expires.”
I call this kind of thinking Stimulus-itis. It's a relatively new form of entitlement illness where companies or even entire industries believe that they just can't do their jobs without government intervention. Despite the fact that the NAR has been charging agents for years, purportedly to make them more successful, the organization's chief economist admits that there just won't be anything his organization's members can do about the impending drop in existing home sales.
What makes this even more sad is that school is out for summer around the country and families that want to move are trying to do it right now. What will become of them without a government program to entice them to buy? I understand that the real estate agents' hands are tied.
I guess someone will have to sell them something.
The fact that sales were up nearly 23% year over year tells me that there are buyers in the market. They were enticed to the market with the promise of a future tax credit, meaning that they had access to the money they needed to buy, but they just didn't have enough good reasons to do so until the government pulled out its stimulus maker. Apparently no one was giving them any good reasons.
Eventually, companies are going to have to start creating their own customers again. During the boom, plenty of sales trainers would berate mortgage brokers for not forging stronger ties with real estate agents. There was so much business out there that they didn't have to create customers. Apparently, the real estate agents were doing the same thing — taking orders in a market that was growing out of control and forgetting everything they knew about selling.
Those days are over. It's time to learn to sell again and take back control of your market. Making fewer excuses about how poorly your team will perform in the months ahead is probably a good place to start.
