Have Home Prices in NW Arkansas Bottomed Out Yet?

See Video of Lawrence Yun of National Association of Realtors comment on the national housing market.

Recent reports indicate that the number of homes sold nationwide continued to drop in November of 2008. But, on the positive side of that statement, the rate of drop was smaller than in recent months.

Purchases of previously owned homes slid 8.6% in November to an annual rate of 4.49 million units.

The Pending Home Sales Index fell 4.0 percent to 82.3 from a downwardly revised reading of 85.7 in October, and is 5.3 percent below November 2007 when it was 86.9. The current index is the lowest since the series began in 2001.

One bright note locally is Bentonville, which actually had a 5% increase in home sales in September, and Fayetteville and Rogers experienced a slight increase in October. However, sales in all of NW Arkansas were down compared to the same periods last year.

We may (or may not, depending on your particular perspective) be hitting bottom. Although prices in NW Arkansas decreased for December the decrease was less than it has been, a flattening out. Of course, we have to wait a few months yet, to see whether prices will start increasing again.

There is also a seasonal adjustment that occurs as homes sold in the winter generally sell for slightly less than in the peak months during the spring and summer. Inventory is still high (i.e. lots of homes for sale).

For the most part homeowners who do not have to sell are staying put. People who must move due to job relocations are the ones selling and they are being forced to face reality and lower the sales price dramatically in order to more the property quickly.

Foreclosures are the other part of reality that is forcing sales prices downward. Until that sector stabilizes, it will be difficult to see prices increasing again.

The Consumer Confidence Index for November was 44.9, up from 38.8 in October, which was the lowest reading since the research group started tracking the index in 1967.

The Gross Domestic Product (GDP) index shrank 0.5% in the 3rd quarter of 2008. That was worse than expected and the weakest it’s been since 2001. GDP measures the value of all goods and services produced within the U.S. and is considered the best barometer of the country's economic fitness.

The Feds have made so many moves, projections, bailouts, refusals to bailout, promises and revisions that comprehension of it all is beyond the capability of most folks. (I’ve tried rubbing my crystal ball but all I see is clouds!)

I wish I could tell you what to do and when to do it but no one can with certainty these days.

The only thing I can say is that prices are significantly down in NW Arkansas and it’s a great time to purchase a home or investment property. If you’re thinking about selling, I would say wait if you can.

On the other hand, if you are thinking about moving up to a larger home, the amount you will save on your purchase may outweigh not getting as much as you might have hoped on the sale of your existing home. In addition, interest rates are at a record low, in the 5% range.

The main thing to keep in mind is that a real estate purchase is traditionally considered a long term investment. Whether we have hit bottom or not really isn’t important from that point of view if you plan to keep the property for awhile. The speculation frenzy of the past couple of years is past, thank goodness!

For more information:

http://tinyurl.com/a4tec3
http://www.nwanews.com/adg/Business/243513/
http://news.yahoo.com/s/ap/20081125/ap_on_bi_ge/financial_meltdown
http://www.nwarktimes.com/adg/National/244604
http://arkansasbusiness.com/article.aspx?lID=78&sID=79&ms=80&cID=Z&aID=110303.54928.122429