Existing Home Sales - down 16.7% for December 2009

Existing Home Sales dropped like a stone (NAR report link), because the first time home buyer's tax credit in it's original form expired. What shall May bring when the extended homebuyer's tax credit expires?


Src: Reuters

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.

Distressed sales were 32% of all sales for December.

Here is the effect of the first time homebuyer's tax credit (of $8 thousand dollars) expiring:

first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.

The median home price up slightly from 2008:

first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.

Inventory is up for December, a 7.2 month supply.

Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply4 at the current sales pace, up from a 6.5-month supply in November.

Now here is something that makes little sense. The West has the highest unemployment rate, yet look at their existing home statistics:

Existing-home sales in the West declined 4.8 percent to an annual rate of 1.38 million in December but are 15.0 percent higher than a year ago. The median price in the West was $236,000, up 2.7 percent from December 2008.

Why is the West still so out of line with income, wages and the actual state of the local economies? An exercise for the reader and if one has more insight, please post a comment.

As always, the best blog for home, housing analysis graphs is Calculated Risk.

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I will try to find graphs but if you look at

where the more exotic mortgages took place they were in California, Nevada and Arizona. This was the epicenter for free wheeling mortgage debacle. Lenders knew that people couldn't afford the homes based strictly on income - instead the borrowed based on property value.

I did a back of envelope calculation based some very conservative assumptions and a huge 'negative equity' problem still exists in the West.

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I'm not so sure

about negative equity except in pocket regions. What I'm wondering is if the price crash simply is delayed in the West. How long can home prices stay that high when the unemployment rate is highest in the West? Yes, I know CA, AZ have had major drops, in some areas 50%, but look at the median, it's like it's pocketed and certain areas haven't dropped hardly at all.

The state I'm thinking this is most obvious in is Oregon.

Max high unemployment rate. Seems like only "California Bend", one city in Oregon which was CA buying up homes, major bubble, has burst in comparison to the rest of the country.

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Oops I mis-read the relevant paragraph

Maybe this has to do with more investors than anything. West is still very attractive rental market.

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land use

land use, zoning is often cited but I think something else is happening. I thought rentals are classified as CRE, not residential.

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income produciing property

but it's very unclear where the classification line is drawn on residential vs. CRE. Seems to be the loan type.

I guess a better question is how much of residential is investment and/or rental, what's the percentage, esp. for the West.

I went looking for this stat, couldn't find it.

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reference?

for I went looking for classification of CRE vs. residential for rental props and found by loan type and not by units. Do you have the official stats classification somewhere on what precisely counts as CRE vs. Residential? That would be damn useful actually...didn't dawn on me to see what exactly the classification metrics are by the official data counts. (duh, like who is counted as employed, this might affect perspectives on real estate stats!)

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Two things

1) Existing Home Sales - single family, condos & coops

2) Multi-family dwelling included in CRE is based on my experience as being former real estate attorney and if you look at the National Multi-Family Housing Council website they track 5 or more units plus this information is included in Multi-family Information Transaction Service (MITS). MITS is the information that various CRE index track for multi-family.

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not saying you are wrong

but this should be nailed down firmly is some sort of statistical definition somewhere. I'll keep my eyes pealed (i.e. U.S. Chamber of Commerce, Fed, BLS and so on). I'm going to post this as a Q on CR too.

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trying to find definitions

Ya know all econ data is tied to NAICS classifications and these are well defined, so all economists refer to them for research. i.e. if you do not all work with the same data set, well, analysis will end up being skewed as a result. Gotta do Apples, to Apples (unless of course you're the BLS and dealing with worker data ;))

So, I'm just looking for those equivalents. I mean housing data is a massive part of the economy, so getting a clear cut definition from some gov. stat organization, one would think I could find it! I emailed CR to see if he knows. Just trying to nail this down because ya know, we're trying to understand how come the West is still so damn expensive when nobody has a damn job and of those working, overall wealth, income has dropped dramatically.

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Rebel, guess what CR says it's ill defined too!

Well, well, isn't this nice. He banks classify loans by purpose, more than terms, yet.....it's a grey zone he thinks. Your 5+ units is a safe bet to be classified as CRE but below that it's not so clear. If the landlord is living in a unit, odds are it will be classified as residential, but even 1,2 units can be classified as CRE.

Looks like we stumbled into a very interesting definition..
how can one really know the rental market if one doesn't know the actual real tally of rental properties?

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