No Buyers in this Buyers Market?

August 24, 2006

Ironically, I have not had a better month in terms of getting buyer clients in a while, but the general news is that the buyers are not taking advantage of the pricing and homes available in the Chicago region. Rates are low. Lots of homes to choose from makes this a great time to buy as long as you are planning on staying in the home for a minimum of two to three years.

Here is an AP article on the latest housing news for Chicago:

House hunters shied away from buying in July, driving down sales of previously owned homes to a 2-1/2-year low. The inventory of unsold homes climbed to a record high.

The new figures, released Wednesday, provided fresh evidence of how much the once-sizzling housing market has cooled.

Existing-home sales dropped 4.1 percent in July from the previous month to a seasonally adjusted annual rate of 6.33 million units, the National Association of Realtors reported. That was the lowest level since January 2004.

Sales were weaker than expected, with economists forecasting 6.55 million units.
Investors, believing that housing sales might be dropping more rapidly than anticipated, sent stocks down for a third straight session. The Dow Jones industrial average lost 41.94, or 0.37 percent, closing at 11,297.90. The Standard & Poor's 500 index fell 5.83, or 0.45 percent, to 1,292.99, and the Nasdaq composite index dropped 15.36, or 0.71 percent, to 2,134.66.
The data comes after a Federal Reserve official hinted Tuesday that higher interest rates may still be needed to tame inflation, a move that could curtail consumer spending. Retailers and home builders, which have the most exposure to consumers, led major indexes lower.
''The focus now is on housing as the market shifts away from inflation and toward growth,'' said John Caldwell, chief investment strategist for McDonald Investments. ''The question is has the Fed done too much, and is housing going to lead us down.''

Although sales prices for homes are no longer bounding ahead, some prospective buyers are still waiting for better deals -- another factor in the weak showing, economists said.

''Many potential home buyers have been on the sidelines, some kicking the tires but mostly waiting for sellers to compromise on prices and terms,'' said David Lereah, the NAR's chief economist.

The median nationwide price of a home sold last month was $230,000, up just 0.9 percent from the same month last year. The median price is the middle point, where half sell for more and half sell for less.

Meanwhile, the inventory of unsold homes in July rose to a record high of 3.86 million. At the current sales pace, it would take 7.3 months to exhaust that overhang. That is the longest period to exhaust the supply of homes since the spring of 1993.
The Illinois Association of Realtors said July home sales were down 11.7 percent to 15,973 homes sold, compared to 18,089 sales in July 2005. The state's median home sale price in July was $214,000, up 2.4 percent from a year earlier.

AP