Foreclosures Boost Sales, Drag Prices
So-called "distressed" sales including foreclosures and short sales accounted for nearly half of all transactions tracked in Q109 by the National Association of Realtors (NAR). The heavy ratio of distressed sales, which traditionally fetch about 20% less than non-foreclosures, pulled down median home prices in most markets. Of the 152 metropolitan statistical areas (MSAs) tracked by NAR, 134 -- or nearly 87% -- reported lower median existing single-family home prices. “In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” NAR chief economist Lawrence Yun says today in a statement. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other," he adds. "In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.” The median home price was $169,000 for the quarter, meaning half sold for more and half sold for less, 13.8% below the level seen in the year-ago period. “Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices," says Charles McMillan, NAR president and a Dallas-Fort Worth area broker. "Most sellers can expect a good return if they’ve been in their home for a normal period of homeownership and haven’t excessively tapped their equity." First-time home buyers accounted for half of all home purchases in the quarter as affordability reached record highs, according to NAR. Existing home sales including single-family and condo came in at a seasonally adjusted annual rate of 4.59m units, down 3.2% from the 4.74m unit pace seen in Q408. NAR saw data from 17 states indicating sales increases from the fourth quarter, which had not yet reflected the first-time home buyer tax credit, while six states saw sales higher than a year before. Write to Diana Golobay.