No bottom yet in housing slump

Add comment December 3rd, 2007

Sales of homes and condos by Rock River Valley Realtors hit the lowest total for a November since 1991.

Last month, area Realtors sold 368 homes. That was down 33 percent from the 550 sold in November 2006 and more than 40 percent off the November record of 617 in 2004.

It marked the first time Realtors sold fewer than 400 houses in a November since 1998, when they sold 388 homes and condos. It was the lowest total for a November since 1991, when Realtors sold 308 houses.

After several years of record sales fueled by lowered lending standards, the nation is in the grip of a sales slump that threatens to push the economy into a recession. Lenders, burned by a record number of foreclosures nationally, have significantly raised credit standards, keeping many families out of the market.

What’s hurting the market locally, says Tony D’Agostino, president of CMF Mortgage Co. in Rockford, is the perception that the housing market is down more than the fact that prospective buyers aren’t qualifying for loans.

“People are just laying low, holding off,” he said. “It’s not like we have a lot more people trying for loans and having problems getting them. We just aren’t getting very many people even applying for loans.”

D’Agostino, who has been in the lending business since 1958, said this is the most abrupt downturn in the housing industry in his career: “It is from the sense that it happened so fast.”

Although locally the highs weren’t as dramatic and therefore the pullback not as severe, November’s sales figure was perhaps the weakest in 2007, a year in which home sales are running more than 18 percent behind 2006’s.

With so few houses selling, the average time houses are sitting on the market was 90 days in November. That’s nearly two weeks longer than it took to sell homes in November 2006 and 29 days longer than in November 2005.

Some frustrated sellers responded by pulling houses off the market for winter. The current listings fell to 3,371 at the end of November, down from 3,462 in October. It marked the first time in 2007 that the number of listings didn’t increase from the previous month.

The only positive out of November’s home sales reports was average price. The 368 houses and condominiums sold for $150,249, up nearly 2 percent from last November’s average of $147,474. Interestingly, the higher average price didn’t receive much of a boost from new construction. Many builders, hoping to clear out unsold properties, are offering discounts or incentives. In November, builders sold 81 finished units for an average of $182,358. That was the lowest monthly average for new construction in 2007.

On the other hand, the average sale price for previously owned homes was $141,188, which was nearly 6.5 percent above last November and is an all-time monthly high in terms of average price for existing homes.