We appear to be hitting the bottom in number of houses sold.  Though existing homes sold were down 3% and new construction sales were down 0.6% in April over March, pending sales (homes under contract) were up 2.1%.  Sales in the U.S. have been bouncing up and down since November, 2008, but have not gone any lower.  Click here to view the Sales-U.S. graph.

On a month-over-month basis (February over January), the total transaction count increased 21%, the largest increase during the month of February since 2004.  Source: Radar-Logic 4/23/09.

Don't Wait to Buy

As quoted from the Wall Street Journal from 4/18/09: Don't Hunt for the Bottom ? "Pinpointing the bottom in home prices is very difficult, akin to picking the bottom in the stock market.  But data and research indicate we're getting close."

*      The ability to afford a home has not been greater since the beginning of the index, 1989.  Click here to view the Housing Affordability Index graph.

*      Interest rates are at an all-time low, forced there by the Government Stimulus plan.  Click here to view Mortgage Rates.  The artificially low rates will rise sharply once the Government discontinues its plan.

On May 16, 2009, HUD Secretary Donovan announced that the $8000 first time home buyer tax credit can be used to cover the buyer's down payment and closing costs on FHA insured mortgages.  Previously, the buyer had to file tax returns before receiving the tax refund from the IRS.

Foreclosures

Many lenders had internal moratoriums on foreclosures as they waited on the Obama administration's housing-rescue plan.  Now they have begun to determine which troubled borrowers are candidates for help and to move the rest to the foreclosure process.  The resulting increase in the supply of foreclosed homes could further depress home prices and put additional pressure on bank earnings as troubled loans are written off.  Source: Wall Street Journal 4/15/09.

The shadow inventory, home foreclosures that have not been put on the market, pose another threat to the market.  As these homes enter the market, they will add more inventory to an already bloated market and drive down home prices even more.  Source: Wall Street Journal, Celia Chen, director of housing economics at Moody's Economy.com.

A total of 803,489 properties entered some stage of foreclosure during the first quarter and a growing number of these properties are more expensive homes.  Source: Realty Trac 4/09.  The number of newly initiated foreclosures and short sales were highest in the prime loans.  Click here to view the Number of Short Sales graph and click here to view the Newly Initiated Foreclosures graph.

Statistically, the factors affecting delinquency are:

*        A higher monthly payment increases the probability of a 90-day delinquency by 7-11%.

*        A 1% increase in the unemployment rate raises the probability by 10-20%.  Click here to view the Jobless Rate map.

*       A 10% fall in house prices raises it by more than half.  Click here to view the House Price Appreciation map.  Source: Federal Reserve Bank of Boston 4/13/09.

Pricing

List prices year over year have fallen 6.5-18.6%, depending on the index that one reads.  Click here to view the Prices-Year Over Year table.  However, list prices for the 10-City Composite Index were up 1.1% during March and up 1.1% for the first quarter since prices were flat in January and February.  This represents the first monthly and quarterly increase in listing prices since the inception of the Composite Index in January 2008.  Source: Altos Research & Real IQ  4/8/09.

As I have indicated in past newsletters, when the housing inventory is double digits in months, we can expect a double digit decrease in list price. Thus, now is not the time to be increasing list prices just because it is spring.  The existing home inventory is around 9.5 months and the new home inventory 10 months.  Click here to view the Existing Home Sales and Inventory graph and click here to view the New Home Sales and Inventory graph.

The further decline in home prices is predicted by the following authorities:

*      The Fitch Report from 4/23/09 states that home prices will drop another 12.5% before hitting bottom.

*      Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service, reports that "We expect prices to decline further through 2009 as consumers remain wary of taking on housing debt in these uncertain economic times."  Source:  HIS Global Insight 1Q Report 4/20/09.

*      "We believe there is another 16% to go in pricing before we hit the bottom."  Karen Weaver, Deutsche Bank.

*      Analyst Meredith Whitney, well-known for her work at Oppenheimer & Co. and now at her own firm, told cable television news outlet CNBC that she expects home prices to fall another 30%.  She is known both for her bearish calls and, thus far, for being largely correct.  Source: Housing Wire 4/7/09.

To see a map of the estimated year when the excess supply of homes will be substantially depleted state by state, click here-Housing Recovery, State by State.  For North Carolina, the year is 2011.

NORTH CAROLINA & WILMINGTON

North Carolina became the sixth most visited state in the nation, according to TNS TravelsAmerica.  Visitors spent $16.9 billion in 2008, up 2.1% from 2007.  Source: Triangle Business Journal 5/12/09.

On Monday, EUE/Screen Gems Studios of Wilmington opened the "Dream Stage 10", a 37,500 square-foot structure and 50 x 50 x 6 foot special effects water tank.  EUE is the largest movie studio outside of California with 50 acres and 9 sound stages.  Now, it has the third-largest stage in the U.S. and one of the largest special-effects water tanks in North America.  Source: Star News 5/18/09.

Listing Inventory - For the last four months, the listing inventory has been pretty much flat.  There was a 1% decrease in inventory for the month of April, with 5,483 homes on the market.

Average List Price ? The average list price of $411,165 is up by $1,902 from April 2009.  The average list price has increased 1.3% over the last two months.

Monthly Average Sold Price ? The monthly average sold price is up 1.4% from last month and down 9.6% from April 2008.  April's average sold price ($221,572) shows a decline of 13.6% from year end 2008.

Median Sold Price ? The median sold price is up 5.3% from last month.  The rolling 12 month (May 08 to April 09) median is $197,900.

Monthly Sold Units ? The number of homes sold is down 7.5% from last month.

Market Absorption Rate ? The number of homes sold in April, 309, divided by the current listing inventory, 5,483, gives us a 17.7 month supply of single family homes.  This is one month greater than last month.

List to Sold price ratio ? The average list price of the sold properties, $235,235, divided by the average sold price, $221,571, gives a ratio of 94.2%.

Seller Concessions ? We had 20.4% of sold properties report a sales concession for April, the average concession being $4,031.

Days on Market ? The average days on market is now 145 days.

CAROLINA & KURE BEACH

There are 604 single family homes for sale, a 13 unit increase over April.

The average list price is $467,247, a slight increase over April 2009.

In April, there were 24 homes sold, divided by the inventory of 604, gives us a 25 month market absorption rate.  This is 3 months lower than last month.

The average sold price for April was $297,475, up from last month.  In April 2008, the average sold price was $336, 327.  For the rolling 12 months, the average sold price has decreased 13.4%.

Source:  April 2009 MLS Report by David Flory pulled 5/10/09.