{"id":1725,"date":"2014-08-21T18:40:34","date_gmt":"2014-08-21T22:40:34","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=1725"},"modified":"2019-07-05T09:25:27","modified_gmt":"2019-07-05T13:25:27","slug":"will-home-prices-depreciate-second-half-of-2014","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2014\/08\/21\/will-home-prices-depreciate-second-half-of-2014\/","title":{"rendered":"Will home prices depreciate second half of 2014?"},"content":{"rendered":"\n
\"house<\/a><\/figure><\/div>\n\n\n\n

It\u2019s no secret that the pace of home sales has slowed during 2014. So what\u2019s ahead for real estate and the housing market? If you really want to know, Irwin Kellner, Chief Economist for MarketWatch, has some advice. In his August 19th<\/sup> MarketWatch.com piece (Opinion: Don\u2019t count on U.S. consumer to save economy<\/a>) <\/em>he eloquently and succinctly stated, \u201cIf you are trying to discern where the economy is heading, look at the consumer.<\/em>\u201d And this applies directly to real estate too.<\/p>\n\n\n\n

July housing figures from the National Association of Realtors\u00ae are due to be released this week (July housing press release August 21st<\/a>); and although good news may be suggested, the numbers may be revealing of where the market is heading \u2013 and it may not be good. The NAR July 22nd<\/sup> (realtor.org) press release indicated that June\u2019s existing home sales increased (compared to May 2014), however it stated that existing home sales were down 2.3% compared to the same time last year. In the area where I list and sell homes, Montgomery County single family home closings (sales), reported by the Greater Capital Area Association of Realtor\u00ae (gcaar.com<\/a>) also dropped off in June (decreased 1.5%); and particularly telling is July\u2019s decrease of 16.2% compared to the same time last year, as well as the 7.4% decrease year to date (compared to last year)!<\/p>\n\n\n\n

The silver lining is that NAR reported that median home prices have increased in 71% of the \u201cmeasured markets.\u201d However, 27% of the measured markets showed a decline in median home prices from last year. Montgomery County median home sale prices are moderating (according to GCAAR stats): increases were about 3% during June and about 2% during July compared to the same periods last year.<\/p>\n\n\n\n

Taking Irwin Kellner\u2019s suggestion of \u201clooking to the consumer,\u201d let\u2019s look at home buyer behavior trends; which may be understood through home absorption rate (the number of homes sold compared to the number of available listings during a given time period). It should be no surprise that the home absorption rate decreases compared to recent years due to the steady growth of home inventories and the reduced number of closings. Surprising is the rate of decrease in the absorption rate (calculated from MLS data) during June and July compared to the same periods last year (a decrease of 15% and 39% respectively).<\/p>\n\n\n\n

Like the average consumer, it seems that home buyers may have become a bit skittish. Kellner points out that contrary to economist\u2019s expectations, the August report of the Thomson Reuters\/University of Michigan survey of consumer sentiment has dropped to a 10 month low. Additionally, he reported that although there has been some good news about employment, he argues that wages are not keeping up with inflation due to the nature of many newly created jobs, which are temp or part-time. Furthermore, he states that consumer savings are either low or \u201cdepleted.\u201d Rounded out by the usual concern about job security, geopolitics, and the general economy: Kellner gives us a glimpse of today\u2019s consumer.<\/p>\n\n\n\n

As for real estate, the statistics <\/a>suggest that the housing market may be at another crossroads. Homes sales have already dropped off during the busiest time of year, and it may be reasonable to expect that sales for the remaining year may also be subdued. The mediating factor will be home prices; which may eventually decline as home sellers try to be competitive with other listings, as well as entice home buyers to buy their homes.<\/p>\n\n\n\n

By Dan Krell
\u00a9 2014<\/p>\n\n\n\n

\"Protected<\/a><\/figure>\n\n\n\n


Disclaimer<\/a>. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s no secret that the pace of home sales has slowed during 2014. So what\u2019s ahead for real estate and the housing market? If you really want to know, Irwin Kellner, Chief Economist for MarketWatch, has some advice. In his August 19th MarketWatch.com piece (Opinion: Don\u2019t count on U.S. consumer to save economy) he eloquently … <\/p>\n

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