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Wednesday, October 1, 2014

Housing Market Starts to Soften

Although sales and inventory are up in the state of Florida, nationally home sales are down, 1.8%, and investors have retreated because inventory of distressed properties has gone down. From The Washington Post article:  "Cash buyers retreat from housing market, cooling home sales":

Sales of previously built homes dropped last month in part because investors paying all cash to buy foreclosures retreated once the supply of distressed properties shrank, a real estate industry group reported Monday.

The National Association of Realtors said that existing-home sales fell 1.8% in August from the previous month to a seasonally adjusted annual rate of 5.05 million. The performance — which captures sales completed last month — is also down 5.3% from a year earlier.

The results signal yet another stumble in the housing market’s stilted housing recovery, though Realtors tried to put a positive spin on the development. The group said that having investors retreat from the market opens up opportunities for the all-important first-time home buyers, who often lost out to all-cash offers from deep-pocketed investors when bidding on foreclosures and other troubled properties.

All-cash sales made up 23% of transactions in August, down from 29% in July and the lowest overall share since December 2009. But it’s unclear if  first-time buyers will step in to fill the void. After all,  home prices are still high and access to credit remains tight for all but the most pristine of borrowers.

The median price for all previously-built homes – including single-family homes, townhomes, condominiums and co-ops – was $219,800 in August. That’s 4.8% above the year ago, and marks the 30th month in a row of year-over year price gains, the Realtor group said. Many experts who track home values say price gains have been moderating, but in many areas they remain above year-ago levels.

Meanwhile, the younger adults who tend to make up the lion’s share of first-time buyers have several factors working against them. Many are struggling to cope with a tight job market and juggling student loan debt at a time when lenders are shying away from extending mortgages to people without top-notch credit.  In the aftermath of the housing crisis, lenders got hit with record financial penalties and lawsuits. They responded by demanding higher credit scores and pristine credit profiles from potential borrowers seeking government-backed mortgages – exceeding the standards set by the government itself.

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