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National Real Estate Market Outlook

In January 2008, the National Association of Realtors predicted resale homes would
increase in 2008 compared to 2007, with the median home price remaining flat.
Not so. In December 2008, NAR now is reporting resale homes prices have fallen over 12 percent in 2008 as compared to 2007, with the median price sinking more than 9 percent.
For 2009 NAR expects sales of resale homes to move up year over year 4.7 percent with median resale price up 0.4 percent.  New single-family home sales endured a 37% drop in sales activity for 2008 and expect another 19.1 percent drop in 2009, with the new-home median price falling 7.8 percent 2008 as compared to 2007.

Even when sales do rise, it isn’t necessarily a sign of a healthy market. The California Association of Realtors anticipates sales of resale detached homes to have increased 12 percent for 2008 compared to 2007, and will increase again by the same in 2009. It is reported that this sales spike was largely due to dramatic price drops among distressed properties. Over 20 percent of California sellers sold their home at a loss in 2008, compared to less than 2% percent in 2006. The running average in the State is 7.7 percent.

Moving forward California is expected to see a whopping 30 percent fall in prices statewide in 2008 to $381,000, and another 6 percent in 2009 to $358,000 even with the anticipated increase in sales volume.
PMI Morgage Insurance Co. reported in October ‘08 that 24 of the 50 largest housing markets are at risk
for price declines in the next two years. Furthermore, price decreases are expected in 16 of the 50 largest markets.
The Standard & Poor’s/Case-Shiller National Home Price Index dropped  16.6 percent year-over year
in third-quarter 2008, a record,  and the National Association of Realtors reported in November 2008 that
median prices for single family resale homes plunged a record 11.3 percent year-over-year in October 2008.
NAR also reported home prices dropped 9 percent in third-quarter 2008 compared
to the same quarter in 2007 in the US, with 80% of all metro areas covered in the report experiencing year-over year price drops. Foreclosures and short sales accounted for up to 40 percent of all home sale transactions in third quarter 2008, as reported by the association.
Rising unemployment suggests a longer and harder fall for home prices, with unemployment expected to approach 8.5 percent by 2010. If that prediction proves true, analysts warn the decline in home prices could on average exceed 30 percent.
Economists estimate homeowners have lost over $4 trillion in wealth since the high, based on the decline in home prices since 2006. More to come is the prevailing belief.

As is typical in real estate downturns, NAR membership dropped 9.24 percent from November 2007 to November 2008, and NAR is estimating their membership could drop to 1.06 million in 2009. They reported a membership of 1.34 million in 2006.

Along with Broker/Agent exodus, technology companies servicing the real estate consumer have felt the slowdown too.  Zillow, Redfin and HouseValues have all experienced significant layoffs due to economic uncertainty.  Stay tuned, for 2009 is shaping up to be a memorable year!

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