The Stats Are Out--The Market Is Dead. Or is it?
Yesterday, everywhere I turned, I was either looking at or hearing a news story about how homes sales plunged 27% nationwide to the lowest number on record. Wait, weren’t we in a housing recovery just a couple months ago? Weren’t we officially out of the recession? Is the media not telling the whole story?
Well, before you go jump off a cliff, let’s see what that really means:
Homes sales fell 27% nationwide… From June to July. There are three problems here:
- Because real estate is seasonal, comparing sales levels with the previous month is statistically unreliable. The proper comparison should between July 2010 and July 2009.
- In King County, closed sales fell 15% compared to July 2009. However, the median home price is up 4% from last July.
- In Snohomish County, closed sales fell 11% compared to July 2009. The median home price fell 5% since last July.
- Real estate is local. When have national real estate trends reflected the Seattle market? While the Seattle area isn’t immune to economic challenges experienced by the rest of the nation, national statistics have never been a reliable indicator of the Seattle real estate market.
- Sales fell to the lowest number on record? What exactly does this mean? How far do the records go back—To the Great Depression? Farther? Nope. The records they’re referring to are from the National Association of Realtors, tracking market activity since waaaaay back in 1999. Yes, that’s just over 10 years. Also, they’re comparing the month of July to July of previous years, so it’s really the lowest July sales level since they began tracking in 1999. July sales were actually higher than sales from January and February of this year, and several months last year.
So why the big real estate market “crash” last month? IT’S THE TAX CREDIT, pure and simple. Take large numbers of buyers who would have purchased in July and August, and convince them to purchase a couple months earlier to benefit from the $8,000 tax credit. This causes May and June sales to spike. What would you expect for July?
Now cheer up and go buy a house before everyone figures out that the market isn’t dead.
Authored by David Monroe, Real Estate Agent and Short Sale Specialist
The Home4Investment Team at Keller Williams Seattle Metro West
Phone: (206) 905-8590