Home sales tumbled in August but prices held steady, at least for now, despite falling demand and rising inventories in most markets according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.
In fact, prices for all three categories of distressed properties - damaged REO, move-in ready REO and short sale - ticked upward last month, while prices for non-distressed properties were flat. The homebuyer tax credit made non-distressed properties more affordable for many buyers and distressed property sales fell while the credit was in effect and picked up after the credit expired April 30.
Average prices for damaged REO rose a healthy 6.3 percent from July to August, while prices for move-in ready REO rose 2.5 percent. Prices for short sales rose 3.8 percent. Meanwhile, average prices for non-distressed properties were nearly level, showing a slight 0.9 percent decline.
We’re in transition,” commented Thomas Popik, research director for Campbell Surveys. “Individual homeowners listing non-distressed properties and mortgage servicers listing distressed properties are holding out for prices established before the end of the tax credit. Meanwhile, only a few homebuyers are willing to transact at these prices - and these are the transactions going into the averages. That’s why we saw such declines in traffic and volume in today’s market,” he noted.
Individual real estate agents responding to the survey commented about hold-out sellers. “We are seeing that sellers of non-distressed properties who have their houses/condos priced fairly are strongly resisting low-ball offers even to the point of not countering. Informed buyers are recognizing quality deals and moving forward, the uninformed are looking for the deals that are touted on Good Morning America or the Today show,” reported a real estate agent in Florida. “Our market has been remarkably stable over the last six months, with the exception of sales falling under the tax credit allowance…prices continued to stay stable or even rose,” added an agent in California.
At the same time, comments from real estate agents indicate that buyer interest is falling. “It’s like we hit a brick wall. The market has almost come to a standstill. First part of the year was great and we actually saw a slight increase in home values. Now listings are reducing their prices - if we can even get an offer, it’s a low offer,” commented an agent in Indiana. “The phone stopped ringing after April 31, 2010. No one shows up to open houses,” complained another agent in California.
The Campbell index for first-time homebuyer traffic fell from 32.5 in July to 29.3 in August; this index had registered as high as 63.5 as recently as April. Current homeowner traffic fell from 41.0 in July to 37.3 in August; this index had registered at 55.2 as recently as April.
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions surveys more than 3,000 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.