After falling for two years in a row, sales of existing homes are expected to edge up 6% in 2009 to 5.3 million. Even with an increase in unemployment, improved affordability is the reason. NAR’s affordability index jumped to 131 at the end of 2008, up 17 percent from 112 in 2007. It’s expected to hover around a still-high 128 in 2009. The index means households earning the national median income have 131 percent of the income needed to buy the national median-priced house.Meanwhile, new-homes sales, already off more that 50 percent from their peak of 1 million in the third quarter of 2006, are expected to continue dropping, to about 413,000 in 2009.Prices have dropped nationally about 12 percent from their peak in 2006, from a national median of $221,900 to $198,600. In some of the markets that were hottest during the boom, prices have dropped even more, as much as 30 percent in Los Angeles and 24 percent in Las Vegas. The drop has made life tough for seller with little equity in their homes. Some 40 percent of sales in the third quarter of 2008 were distressed sales, either short sales or forecloses, and according to NAR data. For 2009, prices are expected to turn a corner.
Outlook: Sales on the Rise
Existing- Homes 2007 **2008 **2009
Sales (in millions) 5.7 5.0 5.3
Prices 218,900 198,600 200,800
Price Changes -1.4% -9.3% 1.1%
New Homes 2007 2008* 2009**
Sales 775,000 487,000 413,000
Prices 247,200 228,200 231,400
Price Changes 0.3% -7.7% 1.4%
AFFORDABILITY INDEX 112 131 128
*Estimated **ProjectedSource: NAR
By Robert FreedmanSource: Realtor Magazine Jan 09 Issue
Posted by Nilesh Jethwa Wilmington,NC Real Estate
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