Valley Home Prices See Modest Decline, Absorption Rate Sets New High
Mahoning Valley Market Report, MVHR - August, 2010. The second straight month for lower home prices and higher absorption rate in the Valley begs the question, "Should we bring back the homebuyers tax credit?"
The decline is explained in part by the number of homes currently active in the market which saw new MVHR highs. August saw the Active Monthly Inventory (SAI) climb to an adjusted 4,181 homes currently for sale. The unadjusted data, however, set new highs. August's inventory of homes for sale was 4,784, an increase of 1.7% over July's 4,702, and 14.3% higher than August of 2009. The Absorption Rate Index (ARI) which is an indicator of how long it will take to sell all the houses currently on the market continued its climb to a new high 13.7 months. This is the highest monthly rate ever recorded by the MVHR for the second month in a row. Likewise, the unadjusted data for July saw an absorption rate at a whopping 16.5 months, a 3.9% increase over July and the highest raw rate ever recorded by the MVHR.
Homes sold in August (286) outdistanced July (248) by a heady 15.3 percent. It wasn't enough, however, to keep the Transactions Per Month Index (TPM) (a twelve by twelve month moving average of homes sold), from falling slightly to 292, a -2.0 percent slip. Last year in August the Valley sold 359 homes.
Pending Home Sales (PHS) can now be seen on the MVHR Data Summary along with the Transactions Per Month Index. Homes under contract but not yet sold are known as 'pending homes', and are considered a leading indicator of future sales. In July, pending homes surged to 520, 35.8 percent more than the 383 reported in July. This is good news and points to more closed sales in September, and possibly a reduction of the number of homes on the market.
Jack Pearce, Broker RE/MAX Valley Real Estate said, “Last month we said that an increasing numbers of foreclosures and the economy's failure to produce jobs will likely exert downward pressure on home prices and home sales for some time to come - despite record low mortgage rates and home prices. This situation has not changed and is unlikely to change in the near future.”
“It's interesting to note, however, that housing, which has lead the way out of nearly all past recessions is lagging so far behind in this one. It has always been housing and its ancillary industries that have provided the jobs to move the economy forward. Without a strong housing market the unemployment rate of 9.5% will remain the new norm.”
“It's also interesting to note, that when the homebuyers tax credit was in full gear the GDP the first quarter was up 2.4 percent. Without the tax credit it fell to an anemic 1.6 percent the second quarter. Clearly the incentive to buy homes in the first quarter had a dramatic effect across the whole of the economy. Locally, we saw nine straight months of significant median home price increases until the month of July when the credit ended.”
“As our Congress is gearing up to pass its $Billion 'Jobs' bill which we know from past experience will have little or no effect in creating jobs that provide for real growth, perhaps it would make more sense to bring back the homebuyers tax credit instead, which we know had a very positive effect. Although, it can be argued that commodities such as housing, should be left alone to seek their own level, if we're going to 'waste' billions of dollars trying to invent unproductive jobs, a homebuyers tax credit would provide taxpayers with a greater return by again allowing housing to put America back to work.”
►See full Mahoning Valley Housing Report for August, 2010 at http://www.ourvalleyhomes.com/
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The Mahoning Valley Market Report is a monthy presentation of the latest housing statistics for the Mahoning Valley of Ohio (Mahoning County, Trumbull County, and Columbiana County) as measured by our market report indexes (MVHI's). The six MVHI's are twelve x twelve month moving averages of each key indicator. These indices are provided free on a best-efforts as-is basis. Statistics contained in the MVHR are derived from data obtained from the Northeast Ohio Real Estate Exchange, an Ohio Association of REALTORS® Multiple Listing Service to which RE/MAX Valley subscribs. The MVHR is not audited and may contain statistical, estimation, or omission errors. RE/MAX Valley Real Estate, Boardman Ohio makes no claim regarding the usefulness or implications of the indices.