Some Home Buyers Waiting
January 9, 2008
There is an upside to the current housing market mess and that is many homes that are on the market are much less expensive now than they were a year ago. Cheaper home prices, however, seem to be regional in nature with some areas seeing less of a decline than others. Some areas such as Las Vegas, south Florida, and central California are seeing big dips in prices, as much as twenty percent in some cases, while other areas of the nation are only experiencing moderate to small reductions in home prices.
Home prices fell 0.4 percent nationally in the third quarter of 2007, according to the Office of Federal Housing Enterprise Oversight. What is surprising is that this is the first decline after 50 straight quarters of appreciation averaging 1.62 percent per quarter. On Wednesday, the U.S. Standard & Poor’s/Case-Shiller home price index, another home price tracker, reported that home prices dropped a record 6.7 percent in October from a year ago.
Home buyers looking for bargains should not jump for joy just yet. It is true that the supply of homes is at a record high and it is true that most experts expect prices to continue to fall for some time to come, but it is also true that most of the homes on the market are still priced above the affordability index of many buyers.
In November of 2007, the National Association of Home Builders reported that only 42 percent of all homes sold in the third quarter were priced low enough to be affordable for families earning the national median income of $59,000. This is a staggering decrease of 61.5 percent from the third quarter of 2001 when household incomes and home prices were much lower