VOL. 125 | NO. 89 | Friday, May 7, 2010
Home Sales Decline in April but Market Leaders Optimistic
By Eric Smith
Real estate professionals won’t call April’s home sales disappointing, but with all the buzz surrounding the homebuyers tax credit that expired at the end of last month the final tally was underwhelming to say the least.
Shelby County saw 1,246 homes sell in April, a 3 percent decline from 1,281 in April 2009 and a 2 percent decline from 1,277 in March, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.
Despite the lower-than-expected total, which ended a two-month streak of increased sales, it’s possible some homes that sold during the month thanks to the tax credit won’t close until as late as June 30.
That possibility has bolstered a bright outlook for the industry.
“I think (sales) are still strong considering where we’ve been,” said Glenn Moore, president of the Memphis Area Association of Realtors and owner of Glenn Moore Realty. “The trend is still moving in the right direction. I don’t think we can expect to see huge bumps like we used to see in the old days when things were rolling out of control.”
The April numbers certainly revealed a handful of positive signs that soften what could otherwise be viewed as a letdown.
For example, last month’s average sales price of $121,229 marked a 9 percent improvement from $111,219 in April 2009 and a 4 percent improvement from $116,279 in March.
Also, April’s total sales volume of $151.1 million was up 6 percent from $142.5 million in April 2009 and up 2 percent from $148.5 million in March.
Moore cited another positive trend – the recent steadiness of the market, underscored by the relatively consistent sales totals during the year. Only two months (January and February) during the past 12 have dipped below 1,200 sales.
But perhaps the biggest highlight from last month’s sales could be found in the breakdown of nonbank versus bank sales.
Bank sales – typically foreclosures or “real estate owned” (REO) sales, as lenders call them – accounted for only 34 percent of the total market, the lowest percentage since last fall.
The county had 423 bank sales last month, a 23 percent decrease from 550 bank sales in April 2009 and a 21 percent decline from 533 bank sales in March.
And it had 823 nonbank sales, a 13 percent increase from 731 in April 2009 and an 11 percent increase from 744 in March.
“We are trending in the right direction,” said Judy McLellan, a broker at Crye-Leike’s Quail Hollow office. “We’re so thrilled to see that the bank sales were not a huge percentage of what we have seen in years past. We’re praying that this is really more of a normal market.”
One factor helping the market return to normalcy is improved consumer confidence. Another is tightened credit guidelines.
Loans that are more difficult to obtain mean today’s buyers are truly qualified borrowers who aren’t getting into bad mortgages that could lead to foreclosures in two or three years, like what happened with the subprime, adjustable-rate mortgage craze of the mid-2000s.
But a big question now is what happens after the tax credit. Will some of the April sales get recorded in May and June, keeping those months afloat? And then what happens after that?
William Mitchell, managing broker at Crye-Leike Realtors Inc.’s Hickory Ridge office and past president of MAAR, said there definitely might be some lag time with sales with paperwork sitting on the desks of closing attorneys.
But, as he pointed out, once the rush of sales ends and the homebuyers tax credit is a distant memory, there are still reasons to invest in real estate without receiving a check for $8,000 or $6,500.
“The government has been giving tax credits for years in the form of interest deductions. Those tax credits are still there,” he said. “Combined with the fact that you’re getting a lower value on a home and combined with the fact that rates are historically as low as they’ve ever been, I think now is the best time in the world to buy.”
Mitchell and others understand that building momentum in the market is difficult at best when the economy is still recovering. But rising prices and falling bank sales have restored hope to an industry sick and tired of discouraging sales reports.
“I think any positive news is good,” Mitchell said. “With that said, I’m pretty optimistic without a doubt. I don’t have any other way to be right now. We’re going to get there.”
Chandler Reports is a division of The Daily News Publishing Co. Inc.