Home Prices Drop Significantly in March 2011, NAR is Optimistic

20
Apr

Home Prices Drop Significantly in March 2011, NAR is Optimistic

March 2011 was not a good month for the real estate industry in the United States.

Home prices dropped 5.9 percent year over year to $159,600 compared to March, 2010 as even as volume increased slightly in over the same period of time according to a new report from the National Association of Realtors. Interest rates remain at historic lows, albeit artificial lows, as inflation is ramping up in all other categories of the American economic experience.

Yet the National Association of Realtors is optimistic.

Lawrence Yun, NAR chief economist, was optimistic. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”

However, I would take anything coming out the National Association of Realtor’s with a grain of salt. If you don’t believe me, read this optimistic report in the New York Times WAY BACK in 2006…

As median sales prices for existing homes slipped to $225,000 from $230,000 in July — pushing them 1.7 percent lower than in August 2005 — sales fell and the backlog of unsold homes continued to rise, the report said. The last time prices fell from their year-earlier level was in April 1995.

David A. Lereah, chief economist for the Realtors association, said the price drop was a taste of what the market should expect in the coming months. But he predicted that prices would probably improve next year.

“We’re in for a ride right now,” Mr. Lereah said. “This is the first of many price corrections for the remaining months of the year — for at least the next three or four months.”

So we have seen national home prices fall from $230,000 to $159,600 and all the while the National Association of Realtors has been telling us their has never been a better time to buy. Now the organization is looking to raise it’s dues $40 per member to fund increased lobbying in Washington to help convince the government to play a more active role in helping Realtor’s sell more homes.

Last year the government did so. They gave away billions of dollars to get the market moving. This year those people who got the tax rebates have seen that money disappear as the market repriced the homes to where they should have been.

Folks, markets are very powerful. We have seen real estate go through a bubble and now we are hopefully near the bottom. It has been a wild and painful ride for many and my heart goes to those families that have suffered.

But when getting guidance to buy real estate, find a trusted local real estate agent and do not listen to the National Association of Realtors. They have one purpose, to help their member agents sell as many homes as possible. Their chief economists have always sugar coated the markets and their lobbyist are doing everything to keep the velocity of homes being sold high as agents only make commissions if a home sells.

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