Home Sales, All Over Map
Memo to those wondering when the housing slump will end: It depends on where you live.
The Wall Street Journal’s latest quarterly survey of housing-related data shows that the market for residential real estate is healing at varying speeds in different parts of the country. The Northern Virginia suburbs of Washington, D.C., and many areas in California that are near employment centers have shown signs of stabilizing, housing analysts say, while the outlook in other places—much of Florida, Detroit and Las Vegas—still appears bleak.
Thursday morning’s report from the National Association of Realtors on June home sales is sure to inflame the debate on whether the housing market is bottoming, but clear answers are likely to remain elusive—partly because of the variations in performance around the nation.
In June, home sales were up sharply from the depressed year-earlier levels in Orlando, Minneapolis, Southern California and the San Francisco Bay Area, according to reports from local Realtor groups and MDA DataQuick, a research firm. But sales dropped 50% in Manhattan, according to Miller Samuel Inc., a New York-based appraisal firm. Sales also declined in Long Island, N.Y., and Charlotte, N.C., among other areas.
A flood of foreclosed homes sold by banks over the past year has crushed prices of low- to mid-range houses down to levels that attract investors and first-time buyers in some areas, notably parts of California.
For Amy Musial, who manages a Starbucks in Sacramento buying a house became “a no-brainer” this spring once she and her husband realized that their monthly payments would be slightly lower than the rent they had been paying on a two-bedroom apartment. They paid about $229,000 for a three-bedroom house that had been through a foreclosure. Several years ago, the same house could have sold for more than $350,000, estimates Shelley Hescock, the real-estate agent who represented the Musials.
But prices of higher-end homes around the country have been slower to fall because there have been fewer foreclosure sand other forced sales of such properties. That is changing as more owners of fancy homes lose jobs, fall behind on mortgages or chop asking prices to realistic levels.
At both the high and low ends of the market, there are still plenty of reasons for caution. Rising unemployment is removing potential buyers and turning others into sellers. Credit remains tight. Appraisers have become more conservative and their estimates are causing many potential sales to fall through. Large numbers of foreclosed homes are likely to weigh on the market for at least another year or two. And a federal tax credit of as much as $8,000 for first-time home buyers ends Nov. 30.
“People are being more conservative with what they’re buying,” says Matthew Montgomery, a real-estate agent at Hammond Residential who works in the Boston suburbs of Newton and Brookline, Mass. In general, he adds, “the bigger the house, the harder it is to sell.”
In the Washington, D.C., area, government-related employment has held up and helped revive housing demand, says Jody Kahn, an analyst at John Burns Real Estate Consulting, a research firm. “Good locations in Alexandria and Fairfax [Va.] are seeing some emerging price stability and even small increases,” Ms. Kahn says, and Maryland’s Montgomery County “is showing price stability.” More remote suburbs will take longer to recover, she says.
In California, San Diego and Sacramento both have become much more affordable, she says. Ms. Kahn also thinks prospects are relatively good in Denver; Raleigh, N.C.; San Jose, Calif.; and the Texas cities of Austin and San Antonio—areas that generally avoided the housing bubble and so don’t have as much need to adjust.
Thomas Lawler, an independent housing economist in Leesburg, Va., says areas that seem to be nearing stability include San Diego, Sacramento, Minneapolis, Boston and the Virginia suburbs of Washington.
Among metro areas that “still have a long road to recovery” are Detroit, Phoenix, Las Vegas, Miami-Fort Lauderdale and Chicago, says Ms. Kahn. Mr. Lawler includes New York, Seattle and Portland, among others, in this category. Problems in these areas include high unemployment and large numbers of vacant homes.
Of course, there are lots of variations within metro areas. The most appealing neighborhoods, offering short commutes and good schools, may vastly outperform marginal areas that thrived during the boom.
The job market outlook is a major wild card for those seeking to divine the direction of house prices. Looking ahead one year, Moody’s Economy.com sees the metro areas of Washington, Minneapolis, Houston and Dallas among those likely to have unemployment rates below the national average. Those expected to be above the national average include Detroit, Las Vegas, Los Angeles, Miami, Orlando, Sacramento and Portland, Ore.
Unemployment may be the most important factor in assessing a metro area’s housing-market prospects, says Mark Zandi, chief economist at Moody’s Economy.com. “If people don’t have jobs or fear losing their jobs ,then buying homes is out of the question,” he says.
By JAMES R. HAGERTY
Source: Wall Street Journal