This article was posted on RISMedia late last week:
Positive Signs: Home Prices Rise 1.7% in Second Quarter
It notes that “Over the year ending with the second quarter of 2009, U.S. home sales prices fell 6.7% in the CMHPI Purchase-Only Series – less than the 8.5% annual decline recorded between the first quarter of 2008 and the first quarter of 2009.”
For comparison, residential sale prices reported in the Austin-Central Texas MLS (single family homes) declined 2.0% from 1Q ’08 to 1Q ’09, about one-third of the national trend. From 2Q ’08 to 2Q ’09 reported sale prices fell 3.5%, still just over half of the national trend.
The article also included this note about the measurement region (West South Central Division that includes Texas:
“West South Central Division (AR, LA, OK, TX): [House prices] grew 1.6% (6.5%, annualized) in the second quarter of 2009. Over the last 12 months, home values decreased 0.3%, and during the last five years, home values increased 21.2%.”
Obviously, this has been a difficult time for homeowners who wanted or needed to sell their homes, but for many who thought home ownership was forever out of reach (particularly in California, Nevada, Arizona, and Florida), it has created buying opportunities. More stringent mortgage lending practices have kept it from becoming the unbridled buying spree it might have been, but clearly some people with average or above average credit capabilities now own homes that they could not have afforded two years ago.
Market cycles happen. I counsel my clients to (1) buy within your means, (2) use a mainstream, predictable mortgage product, and (c) choose your time to sell. Over almost any 5 year period, home values appreciate. It would be difficult, if not impossible, to find any 10 year period when values declined generally.
Of course, conditions vary even with local market areas. In the Austin area, there are neighborhoods today where listings sell in30 days or less and others where inventory can languish for months. Nonetheless, if you’re going to pay for a place to live, why not give yourself the opportunity to grow financially.
Where else could you have put your money that it would have grown more than 20% in the past 5 years?