While most experts had predicted that the residential real estate market in 2011 would remain unchanged from 2010, many had also expected a faster absorption rate of unsold inventory of existing homes compared to the previous year. This expectation seemed real for a fleeting moment in early 2011, mostly due to the buzz created by expectations. However, recent data indicates that sales of existing homes may decline further this year.
According to statistics released by the National Association of Realtors (NAR), 4.9 million existing homes were sold in 2010, which amounted to a 5 percent decrease from 2009. But data collected by CoreLogic estimates that sales of existing homes actually fell 12 percent to 3.6 million homes. The difference in these figures is largely due to the data sources and methodologies used by NAR and others.
NAR's numbers are based on data collected from multiple listing services and large brokerages. This means properties bought by banks at auctions for the value of their outstanding loans would likely be considered as sales on the NAR data. Such properties also show up on comps as “sold,” whereas in reality, these are bank-owned unsold properties. CoreLogic gets its numbers from public sales records from courts and counties. CoreLogic believes NAR’s methodology inflates actual sales by 15-20 percent. Inventory of unsold homes on the market in November 2010 represented a 16 month supply according to CoreLogic, as compared to NAR’s 9.5 months.
If CoreLogic’s numbers are true, there are plenty of unpleasant implications worth mentioning. A slower sales rate means it will take longer to sell unsold inventory. More homes for sale in a given market mean lower prices. There are many factors contributing to the decline in sales. Anemic sales caused by the expiration of the federal homebuyer tax credits, the impact of sales of distressed properties, and the excess supply of unsold homes are all choking the sales and prices of real estate.
A national repeat-sales home-price index compiled by CoreLogic was down 5.1 percent in November 2010 from a year ago. If that trend continues, home prices nationally will probably be down 10 percent year-over-year by spring of 2011.
According to statistics released by the National Association of Realtors (NAR), 4.9 million existing homes were sold in 2010, which amounted to a 5 percent decrease from 2009. But data collected by CoreLogic estimates that sales of existing homes actually fell 12 percent to 3.6 million homes. The difference in these figures is largely due to the data sources and methodologies used by NAR and others.
NAR's numbers are based on data collected from multiple listing services and large brokerages. This means properties bought by banks at auctions for the value of their outstanding loans would likely be considered as sales on the NAR data. Such properties also show up on comps as “sold,” whereas in reality, these are bank-owned unsold properties. CoreLogic gets its numbers from public sales records from courts and counties. CoreLogic believes NAR’s methodology inflates actual sales by 15-20 percent. Inventory of unsold homes on the market in November 2010 represented a 16 month supply according to CoreLogic, as compared to NAR’s 9.5 months.
If CoreLogic’s numbers are true, there are plenty of unpleasant implications worth mentioning. A slower sales rate means it will take longer to sell unsold inventory. More homes for sale in a given market mean lower prices. There are many factors contributing to the decline in sales. Anemic sales caused by the expiration of the federal homebuyer tax credits, the impact of sales of distressed properties, and the excess supply of unsold homes are all choking the sales and prices of real estate.
A national repeat-sales home-price index compiled by CoreLogic was down 5.1 percent in November 2010 from a year ago. If that trend continues, home prices nationally will probably be down 10 percent year-over-year by spring of 2011.
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