Home sales fell in the second quarter from a year earlier, reflecting a national trend, but the Albuquerque metro area’s housing market continued to show some positives, according to a new report from the Greater Albuquerque Association of Realtors.
The median price for a detached, single-family house increased 4.1 percent in the second quarter, from $170,000 in 2013 to $177,000 this year, as the fledgling recovery spread throughout the metro. Median price means half of the homes sold for a higher price and half sold for less.
Of the metro’s 42 multiple listing service areas, 25 experienced price increases in the quarter compared with just 16 a year earlier. In the second quarter of 2011 – the year when the housing market appears to have hit bottom – only four of the 42 MLS areas experienced median price increases.
The median price increase and a 4.6 percent increase in average price to $216,974 stem largely from a pickup in sales of homes priced $200,000 and higher, a market segment that saw less activity in the initial phase of the housing recovery, said John Kynor, GAAR’s president.
Although price increases are uneven across the metro, varying in some cases from one block to the next, he said eventually “a rising tide lifts all ships.”
The 2,353 detached-home sales during the quarter mark a 6.8 percent drop from 2,526 a year earlier, reflecting what Freddie Mac has called a trend of “stalled” housing markets around the country.
Quarterly home sales steadily had increased year over year since the second quarter of 2011, driven in part by investor purchases of mostly bargain-priced homes, often through foreclosure or short sales.
Despite the decrease, the 2,353 homes sold in the second quarter are the third highest for any quarter since 2007.
While mortgage rates have come up from the all-time lows of late 2012/early 2013, they remain close to historic lows for fixed-rate mortgages at roughly 4.1 percent for 30 years and 3.2 percent for 15 years, according to Freddie Mac survey data.
“What’s interesting about rates, although they bounce around, they’ve been pretty consistent. There’s no compelling reason to buy right now,” Kynor said. “When rates start to climb, there’s a reason to buy.”
An average of about 5,134 homes, both detached and attached, were listed for sale in the second quarter, the highest number in almost three years based on association data. The increase in listings is evidence of growing confidence among homeowners to sell their homes and buy another, Kynor said.
“Buyers have a good selection to choose from as well,” he said.
The ratio of sales to listings in the second quarter, computed on a monthly basis for both detached and attached homes, points to a 6.1-month backlog of homes on the market. GAAR uses the term “absorption rate” to describe the backlog, since it would take that many months to sell off or absorb it.
As a rule of thumb, a six-month backlog is considered a balanced market between buyers and sellers. A longer backlog tilts the market to the buyer, a shorter backlog to the seller.
The absorption rate is a fairly reliable indicator of the local economy. A seller’s market typically occurs in a strong economy, when housing demand increases due to job growth, while a buyer’s market typically occurs in a weak economy.
A quirk in second-quarter statistics is that both prices and the inventory of homes for sale increased, Kynor noted. Traditionally, when the inventory goes up relative to sales, prices go down, which is essentially what happened during the housing bust years of 2008-11.
“It’s not a cause for concern but a cause for confusion,” he said. “I’ll be interested to see how that pans out.”
Rising prices have contributed to a decline in the number of homes with so-called “underwater” mortgages, meaning the homes are worth less than what’s owed on them. Underwater homeowners, who likely purchased during the peak of the housing bubble, would lose money if they sold their homes.
As of the second quarter, Irvine, Calif.-based RealtyTrac reported 11 percent of homes statewide were seriously underwater, meaning the homeowners owed at least 25 percent more than the estimated market value of the property. The second quarter underwater rate is half of what it was in late 2012.
Original Article By: Richard Metcalf- Journal staff writer