Local Market Conditions: Talk to Me!

by Lawrence Yun, Chief Economist, NAR Research

Existing home sales fell by one percent in April nationally. Like the weather, there continue to be large regional and local market variations. April resales rose 6 percent in the West and fell 6 percent in the Midwest.

Recent sales data also reflect something I have not seen over the past two years: several specific markets experiencing a substantial rise in sales - to the tune of 20 percent or better on a year-over-year basis. The notables include Detroit, Ft. Myers, Las Vegas, Orange County, Riverside, San Diego, and Sacramento. These are also markets that have experienced substantial price declines - to the tune of 20 percent of more. Improved affordability conditions have enticed buyers to pick up properties on the cheap.

Measurable sales declines were in the regions where things were holding up well just last year. Seattle and Portland in the Pacific Northwest, Charlotte and Raleigh in the Carolinas, Salt Lake City, and the Texas markets have seen sales decline. Home prices in these regions are still moving up.

Meanwhile, pending home sales, which measures contract signings but not closings, rose 6.3 percent in April. As with sales closings, the increase was driven heavily by sales increases in distressed regions and local markets undergoing significant price declines. Regionally, all regions but the Northeast showed solid gains over the month after accounting for seasonal factors. The West region showed an outright gain even on a year ago basis. (More about pending sales on page 5.)

A sample of areas with a double-digit rise in pending sales included:

• Sarasota, FL
• Fairfax County, VA
• San Diego, CA
• San Bernardino, CA
• Bakersfield, CA
• East Bay area, CA
• Sacramento, CA

Empirical data are always good to assess market trends. However, there are many trends that are difficult to quantify or not yet in the "data system" that can provide important information
of the latest developments in the market place.

For example:

• Vulture funds purchase multiple properties at steep discount
• Increased phone inquiries
• More foot traffic at open houses
• Incidence of multiple-bids after sharp reduction in home prices
• More than normal incidence of investors and not genuine homeowners buying homes
• REO properties "distorting" information as these properties are on the MLSs much longer than a similar property that is not foreclosed
• All-cash purchases on the rise
• Foreign buyers' presence or absence compared to norm
• Alternative financing arrangements including seller financing
• Home sellers preferring to take the property off market rather than lower prices
• High gas prices changing buyer preference for smaller-sized homes and closer to job centers and hurting far out suburbs

I find that much anecdotal information often gets confirmed with hard empirical data after several months. So knowing anecdotal information - particularly if it is consistent from different sources - can say a lot of what may be currently going on that do not show in any of the official statistics.

We say it often, but it cannot be said enough: all real estate is local. So knowing what your local trends and experiences are is important. Having that information can help us accurately assess real estate market conditions.

I end this month's column with a request: Send me your story. Make it short and sweet. Believe me - your personal knowledge about how things are going in your market is vital in analyzing trends that impact all REALTORS®. You can e-mail me at data@realtors.org.