Home Sales Dropping Everywhere - But...
Home sales plunged again in July across the country. The National Association of REALTORS® stated that existing (resale) home sales dropped 3.8% in July, 2007. The press loves this stuff. They love to print how bad things are. Face it, good news doesn't sell. What you may not have heard is that new home sales went up in July. The newspaper and news stations in Austin reported that home sales dropped in July, which they did. What they didn't tell us was that the decrease was primarily in the homes priced below $130,000. This was due in a large part to the fact that lenders weren't giving away money like they were earlier in the year. Many buyers simply couldn't get loans.
Austin Home Prices
Home prices in Austin went up in July, which seems to contradict the statistic about home sales dropping. So what's up with that? I was talking with Utah REALTOR® Gary Pryor and he said the same thing was happening in many markets in Utah. Sales were down and prices were up. With the lower priced houses not selling as well, what was? Higher priced homes. So did we see artificial appreciation as a result of this or was our market continuing to see prices go up because buyers were driving them up?
Pool of Home Buyers Shrinking
Well, here is another thing to throw at you for some thought: the pool of buyers dropped 10%-15% with the credit crunch. Were they all the sub prime buyers who were buying the low end homes? I think not. Many were getting no doc loans, interest only and other creative loans. So I don't personally believe that the drop in buyers affected just the lower priced homes. That leads me to the conclusion that the rising prices was due to market health. The only way to know is to keep watching the real estate market in Austin and in other areas over the next year or so. I'd love to hear other people's thoughts on this.