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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowFirst-time homebuyers continued to help buoy sales of previously occupied homes in the Midwest last month but not enough to offset continued concern over the unstable economy, according to two reports released yesterday.
Overall sales in the Midwest fell 8.5 percent from a year ago, the National Association of Realtors said, and the median sales price declined 10 percent, to $145,800.
Nationally, existing home sales fell 6.6 percent from May 2008, without adjusting for seasonal factors, while the median sales price dropped almost 17 percent, to $173,000, the Realtors association said.
Midwestern cities, while avoiding the ballooning home prices and sales stampedes seen on the coasts, have struggled with deep hits to their auto industry and manufacturing base. Sales of previously occupied homes fell in all but two of the 12 major Midwestern markets tracked in the Associated Press-Re/Max Monthly Housing Report, also released yesterday.
Median sales prices also sagged in 10 of the markets tracked in the survey.
The survey includes all home sales recorded in the metropolitan statistical area by all local agents, regardless of company affiliation.
Sales declined by more than 20 percent in five of those cities – Fargo, N.D.; Wichita, Kan.; Indianapolis; Kansas City, Mo.; and Chicago.
“It seems like it’s all or nothing,” said Anthony Marsiglio with Re/Max Crossroads in the Indianapolis suburb of Plainfield. “You have the Realtors who are doing well and are busy and then you have ones who are doing nothing.”
Indianapolis saw sales fall 22 percent from May a year ago but the median sale price held steady at $125,000.
Marsiglio said he’s seen interest in all types of homes, even properties in the city’s rural outskirts, where customers had been largely nonexistent.
He said he’s seen a lot of first-time homebuyers as well as transfers from out of town, but financing is taking longer.
Fargo, N.D., saw the biggest sales drop in the region, declining 35 percent from a year ago. But it also saw its median sale price increase 3 percent, to $140,500. The only other sale-price increase was Des Moines, Iowa, where the price leaped 10 percent, to $184,645, while overall sales declined 4 percent.
Chuck Walen with Edina Realty in Fargo said his office, as a whole, was busier than a year ago. He estimated that 70 percent of business is from first-time homebuyers, compared with 50 percent a year ago, with most of them attracted by an $8,000 federal tax credit.
That interest has spiked sales of homes in the $150,000-to-$200,000 range while mid-level and high-priced home sales continue to be sluggish, he said.
He also said he’s seen it take longer for buyers to get financing, especially as they go through the Federal Housing Administration, as opposed to conventional loans. But he said he saw that as a positive.
“They’re making sure people can afford what they’re buying where in the past, if you had a pulse – sign here,” he said.
In Omaha, Neb., sales declined 14 percent from May 2008 while the median sale price declined 8 percent to $160,950.
Dave Egan with NP Dodge Real Estate said that while the recession has had less of an effect in Omaha than in other parts of the country, knowing someone who has been laid off makes potential buyers “a little more careful and more likely to stay put.”
He said his experience with first-time homebuyers has included dealing with unrealistic expectations of how much a home should cost.
“They read the national trends that say (prices are) down 25 percent so they’re trying to get a house for cost, but we’re down only 6 to 10 percent in Omaha,” Egan said. “It’s an education.”
He also said he’s seen some problems with appraisals, mirroring a national trend that the National Association of Realtors warned could short-circuit a recovery in the housing market.
Lawrence Yun, the association’s chief economist, said slow and low appraisals are stalling transactions and helped cause May’s sale numbers to come in below expectations.
In two occasions recently, Egan said the appraisal price for a home was much lower than expected. The seller in one case was able to reduce their price to match the appraisal but the other sale fell apart.
“The banks are telling them to be careful,” he said.
Minneapolis was one of the two cities in the region to see an increase in sales with sales up 2 percent from a year ago while the median sale price dipped 18 percent, to $169,900.
Pam Kowalski with Counselor Realty in suburban Minneapolis said the market for homes at $200,000 and lower has been extremely busy with first-time homebuyers and investors snapping up deals while interest rates and home prices are still low.
“I think the message is out that we’re at the bottom and the bottom doesn’t last forever,” she said.
She also said the inventory of homes available for sale in the market has declined from a year ago. She said she listed a home for $199,900 last week and immediately had two offers.
She said, “There’s good activity on the houses that are well cared for and priced right.”
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