May SWMI Existing-Homes Sales Continue to Rise

ST. JOSEPH, MI – “May, as the start of our peak selling season, continued the positive increases from month to month this year. Houses sold and closed in May were up 13 percent over those sold in April. In fact, May this year was only six percent behind the houses sold in May 2008. That translates into just 15 fewer houses this year for May. Because of the Homebuyer Tax Credit, first time homebuyers are starting to get back into the market. The current program requires the Buyer to close on their home prior to December 1, 2009 to receive the tax credit,” stated Gary Walter, EVP, of the Southwestern Michigan Association of REALTORS®, Inc.

Walter continued, “Other positive indicators includes the total dollar volume increase of 50 percent over that in April and homes in the higher price ranges are starting to see sales. The increase in the average price went up 32 percent and median price 47 percent over what we had in April. Our market is prime for buyers to find a good home at the right price. Houses are still priced lower than at this time last year and the inventory is ample for selecting a home that meets what buyers want.”

“We still have negative numbers in our year-to-year comparisons. These numbers reflect a three-year decline from the peak year of 2006 signifying that the market is adjusting to the current conditions.”

The number of houses sold and closed in SWMI in May was 6 percent behind May 2008 (222 vs.237). The total dollar volume for the month was down 11 percent ($35,959,418 vs. $40,377,044). The average price declined 5 percent from last year ($161,979 vs. $170,367) and the median 13 percent lower (116,163 vs. 133,250). The median price is the price at which 50 percent of the homes sold were above that price and 50 percent were below.

Nationally, existing-home sales showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the National Association of Realtors®. May’s increase was the first back-to-back monthly gain since September 2005.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.

The national median existing-home price for all housing types was $173,200 in May, down 16.8 percent from a year earlier. Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Regionally, existing-home sales in the Midwest jumped 9.0 percent in May to a pace of 1.09 million but are 4.4 percent below May 2008. The median price in the Midwest was $145,800, which is 10.4 percent lower than a year ago.

Lawrence Yun, NAR chief economist, expected an improvement. “Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” he said. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”

Yun said the appraisal problem is serious. “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, stated, “The first-time buyer tax credit should be expanded to all buyers of primary homes regardless of income. Extending the credit into 2010 would allow more time for the market to catch up with underlying demand, in part because many families with children, who normally time their purchase based on school year considerations, do not have enough time to move before the start of school in late August.

In SWMI, the average mortgage rate stayed nearly the same. In May the mortgage rate was 5.26 compared to 5.22 in April. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 4.86 percent in May from a record low 4.81 percent in April; the rate was 6.04 percent in May 2008. Last week, Freddie Mac reported the 30-year fixed at 5.38 percent; data collection began in 1971.

Nationally, the total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.

Walter reported on the local market, “Our homes-for-sale inventory decreased almost 2 percent from May 2008. This is another sign that buyers are not sitting on the fence any longer. More homes hit the market in May with an additional 128 homes listed. At the end of May there were 3,539 listings, which is a 19-month supply of great homes based on the last 12 months of sales.”

The numbers reported for local sales include residential property in Berrien, and the western half of Van Buren and Cass counties. All three counties are included in numbers and percentages and do not reflect differences in any individual areas.

The Southwestern Michigan Association of REALTORS®, Inc. is a professional trade association for real estate licensees and ancillary service providers for the real estate industry in Van Buren, Berrien and Cass counties. The Association is located at 3123 Lake Shore Drive St. Joseph, MI 49085, (269) 983.6375. They can also be contacted through their web site, www.swmar.com.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

"May this year was only

six percent behind the

houses sold in May 2008."