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Increased Sales Activity not Reflected in Home Prices

by devteam February 24th, 2012 | Share

Radar Logic’s RPX Composite price for 2011 reached itsrnlowest point in December since the housing crisis began.  The Composite, which tracks housing prices inrn25 major U.S. metropolitan areas, fell 6.8 percent during the year endedrnDecember 22 to $173.76 per square foot, a price last seen in February 2003.</p

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This decline was driven by an 8 percent decrease in homernprices in what Radar Logic calls the traditional market, i.e. non-distressedrnsales.  The latter contributed less tornthe decline by comparison as prices for foreclosures have declined just 5rnpercent during the same period.  Thernaverage distressed home now sells at a price 39 percent lower than other sales.</p

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Sales activity in the traditional market increased 32rnpercent on an annual basis and distressed sales declined from 30 percent ofrntotal transactions to 23 percent, a -9 percent change.  Total sales increased 19.6 percent.</p

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Radar Logic notes that sales activity appears to bernincreasing every month despite that the most recent reporting period is in whatrnis usually considered a seasonal trough. rnThis could be the result of a “confluence” of several factors.</p<ul class="unIndentedList"<liPrices are still at decade low levels and, whilernbuyers have seemed reluctant to purchase even at these levels, perhaps that isrnchanging. The same might be true forrnsellers' willingness to accept the lower prices for their homes.</li<liInvestors seeking to buy distressed propertiesrnto rent may have exhausted that supply and are turning to the non-distressedrnmarket for product.</li<liPerhaps we are used to seeing such depressedrnlevels of activity that any increase appears stronger than it really is.</li</ul

Even these observations taken together, Radar Logic said, dornnot explain why, while sales activity has apparently increased, this has notrnyet prompted any improvement in prices.  “Itrnwill be telling,” the report says, “to watch the data for the next few months.”

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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