Monday, January 12, 2009

December Residential Sales Statistics

As usual, The Arizona Daily Star found a way to put the worse spin on the housing news. They report that pending contracts--home purchase contracts that are somewhere in that twilight zone between offer acceptance and transfer of ownership--hit an 11 year low at 641 in December.

Who cares about pending contracts? Sales fall apart because the buyer can't get financing, the seller can't or won't do repairs, and lots of other reasons. What I want to know is how many properties have new owners? How many sales actually closed escrow?

The Tucson Association of Realtors reports that 775 units sold in December, a 22% increase from the previous month, and a 2.92% increase from the previous December.

The good news for buyers, and bad news for sellers, is the average sale price was $200,055 last month and the median sale price was $167,900. These numbers are down 22% and 20% respectively from the previous year. They are comparable to the average and median sale prices in spring and summer 2004.

Part of what is dragging the prices down is that many of the sales are short sales (the lender allows the mortgagor to sell for less than the mortgage balance) and foreclosures (the lender has taken the house back from a delinquent mortgagor). When an appraiser appraises a house so a new buyer can get a loan on it, the appraiser has to use comparable sale data to determine the value of the house. Even if the appraiser is evaluating a house that is not being sold under duress, if the nearby sales were at low prices because of short sales and foreclosures, the appraiser has to use those sales on the appraisal.

Those of us who bought our houses before prices begain to skyrocket in 2004 may feel we have lost a lot of equity in our homes. But the equity was only in theory on paper. Unless we sold sometime in 2005 or 2006, that theoretical equity is money we never had. If you bought in 2004 or earlier, and you have maintained your home or even improved it, you can probably sell your house for as much or more than you paid for it.

Those of us who bought in 2005 or later (I am in both the before and after groups), or who took out home equity loans on houses bought earlier, may have to recognize that our houses are worth less than we owe on them. If these folks need to sell their houses for some reason, they could be in a difficult situation.

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