The Housing Chronicles Blog: Falling prices boosting sales of existing homes

Monday, March 23, 2009

Falling prices boosting sales of existing homes

We've certainly been seeing this trend here in California, and now it appears it's also gone national: as prices plummet, home buyers (many investors hoping to hold on and rent homes out for cash flow) rush into the market. So does that potend a bottom or is this market still feeding on itself? From a Wall Street Journal story:

Home resales rose 5.1% to a 4.72 million annual rate from 4.49 million in January, the National Association of Realtors said Monday. About 45% were foreclosure and short sales.

The large number of these distressed property sales is driving prices lower. The median price for an existing home fell 15.5% last month to $165,400. Falling prices depress demand, contributing to the high inventory that is a factor keeping prices down. Inventories of previously owned homes rose 5.2% at the end of February to 3.8 million available for sale, which represented a supply of 9.7 months at the current sales pace...

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