Housing prices decline, but home sales are rising
Nationwide home prices are declining, but home sales are beginning to rise. The past year has been volatile for real estate, but more people have been consulting with loan lenders to purchase a home. The low prices are thought to be the reason for the spike in purchases.
Wealthy and investors buying houses again
Figures for nationwide home sales from the National Association of Realtors indicate that an increasing number of people are purchasing homes, according to CNN. Home sales rose 2.7 percent over January 2011, to a seasonally adjusted rate of 5.36 million per year. The increase is also a 5.3 percent improvement over January 2010, marking the first time in seven months that home sales have been higher than figures from a year ago. However, the increase may be bolstered by people who don’t need to go to loan lenders to finance a home purchase. The number of cash purchases was 32 percent of all sales, up from 26 percent in January 2010. Sales to investors made up 23 percent of sales, which accounted for 17 percent of home sales in January 2010.
Foreclosures may have made up difference
The increased number of cash and investor purchases likely is due to deep discounts available on foreclosed properties. Distressed properties, according to Bloomberg, accounted for 37 percent of January 2011 home sales. More homes are available at rock bottom prices, and many a loan company is anxious to get a home off its balance sheet. There aren’t many people who have enough instant cash to pay for a home out of pocket, even one sold at half its value. The median home price has declined 3 percent since January 2010, to $158,800.
Home prices dropping
Many major metropolitan areas are still experiencing declining home values, according to USA Today. The Standard & Poor’s Case Shiller Index recorded drops in all but one of the 20 major cities it tracks. Only Washington D.C. did not see home prices decline. Areas with inflated real estate values such as Arizona, California and Florida have experienced the worst in decline, but southern states like Mississippi and Alabama are also experiencing price declines. The rise in sales may signal reversing demand, and many economists believe 2011 will be a year of dramatic recovery.