Northeastern United States Does Not Follow Dire Housing, Real Estate Predictions

The real estate news for the past couple of months has not been good: record foreclosure numbers, financial problems in the home loan industry, and a general softening of the real estate market. On Sept. 11, the National Association of Realtors downwardly revised its home sales estimations again, saying it expects existing home sales rates and prices to drop in both 2007 and 2008.

This information would indicate that the U.S. is firmly entrenched in a buyer's market. A buyers market is defined as a market that has more sellers than buyers, and low prices result from this excess of supply of houses. So you would think that any buyer looking for the perfect house would have a large inventory to choose from and low prices.

Yet an informal and unscientific poll of four families recently transplanted to southeast Connecticut reveals this is not the case. Three families came from Michigan, and one from New Jersey, and all four had difficulty finding a house in a 6 month time period. One rented a house in Waterford, CT for 6 months before finding a house to purchase, in that time period the couple estimates they saw 90 houses. One could not find a pre-existing home in Stonington, CT where they wanted to live, so they purchased an as-of-yet uncompleted home in a new development; they have lived in three rental houses while waiting for their house to be built. One looked for a house for more than 4 months on a long distance basis before moving to Connecticut and living in a Days Inn for close to a month before closing on a house; they were lucky and a made an offer the first day an acceptable home went on the market in the neighborhood where they wanted to live. The last family moved to their second rental house and has not yet found a permanent home. Not much of a buyer's market.

According to National Association of Realtors data, national sales of existing houses have dropped approximately 9 percent from a year ago. However, like any average, the number of house sales varies by region, and some are doing better than others. The Northeast only experienced a decline of 2.9 percent in seasonally adjusted sales of existing home sales in 2007 versus 2006; not seasonally adjusted sales actually showed a 1.8 percent increase. And prices, while flatter than several years ago, are not experiencing a sharp decline.

Personal observation reconfirms this figure. For example, the only three houses in my neighborhood to go on the market in the past three months all had a buyer within six weeks. Neither of the two sold homes received asking price, and the sale pending house remains in negotiation, but the houses did sell (at no less than 87 % of asking prices), and not at a significantly lower sale price to what the market value says they should be worth.

Essentially, while home prices continue to fall in markets like the Midwest, the Northeast is experiencing slower rates of price appreciation but not a flat market.

Sources:

National Association of Realtors

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