From Homescape

Some economists are analogizing the current housing problems to an image of a falling knife. Despite proposed bailout plans from government officials and lending companies, attempts to stop the market from falling any further has done little to stop the bleeding. A report released on Monday from the National Association of Realtors, shows that the average median home prices in the country continue to decline for a six consecutive month.

The national median existing-home price for all housing types was $201,100 in January, down 4.6 percent from a year ago when the median was $210,900. Because the slowdown in sales is greater in high-cost markets, there is a downward pull to the national median from a year ago when there were relatively more sales in higher priced areas, according to the NAR report. Currently, there is a 10.3-month supply of housing inventory, which is up from the 9.7-month supply in December.

It’s all local
While some metropolitan areas such as Buffalo, N.Y., and Peoria, Ill., are seeing home price gains, home prices are down in every region.

Existing-home sales in the Midwest rose 3.4 percent to an annual pace of 1.20 million in January, but are 20 percent below January 2007 figures. The median price in the Midwest was $154,200, down 4.0 percent from a year ago.

Existing-home sales in the South slipped 0.5 percent in January 2007 to 1.95 million and are 22 percent below a year ago. The median price in the South was $164,300, which is 5.9 percent lower than January 2007.

In the West, existing-home sales declined 2.1 percent to an annual rate of 930,000 in January and are 28.5 percent below January 2007. The median price in the West was $300,100, down 6.7 percent from a year ago.

Existing-home sales in the Northeast fell 3.6 percent to an annual rate of 810,000 in January, and are 25.7 percent below a year ago. But the median price in the Northeast was up at $270,800, a 3.1 percent increase from January 2007.

The U.S. Census Bureau reported last month that sales of new single-family homes dropped 26.4 percent in 2007 compared to 2006 — the steepest drop in 45 years.

A natural course
With the expanding number of foreclosures and stricter lending restrictions for new mortgages, home values will continue to take a hit across the country. Several realtors and industry experts predict that the national medium home prices will fall below $200,000 by February. While no home owner wants to hear that their house cost significantly less than it did a year ago, by letting nature take its course, I think what we’re starting to see is the market beginning to correct itself from the hyperinflated prices generated during the housing boom. Sellers are no longer seeing a 30- to 40-percent gain in home value after only owning their property for less than three years.

Owners need to be realistic about how much their homes are really worth in today’s market. Just because your neighbor sold his home for $30,000 more its initial value two years ago, doesn’t mean you’ll be getting the same asking price tomorrow, especially if there’s three other homes for sale and two in foreclosure on the same block.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com