(AP Photo/Denis Poroy)
By Mary Ellen Podmolik | Two widely divergent pictures of the housing market emerged Wednesday: One of where it’s been, and the other of where it’s headed.
One, from the National Association of Realtors, showed that pending home
sales, which track purchase contracts rather than closings, rose 6
percent in April. The third consecutive month of improvement is largely
tied to an April 30 deadline — buyers had to have sales
contracts signed in order to qualify for the federal homebuyer tax
credit by that date. It was the biggest showing for pending home sales since last
October.
The other, from the Mortgage Bankers Association, showed that for the
fourth consecutive week, mortgage applications tied to home purchases
fell and now stand at the lowest application level since April 1997. For
the week ended May 28, purchase application volume fell 4.1 percent.
Neither statistic comes as much of a surprise to the economists who watch the housing market on a macro level, nor to the real estate agents who worry about their business in a post-tax-credit-fueled environment.
Despite mortgage rates remaining under 5 percent for a 30-year, fixed-rate loan and rising affordability, “if you’re tring to sell your home now, it will be harder than it was a few months ago,” said Celia Chen, director of housing economics at Moody’s Economy.com. The division of Moody’s Analytics predicts home sales will fall 6 percent from the year’s second to third quarter before picking up again by year’s end.
Michael Shenfeld, a Koenig & Strey Real Living agent in Chicago, said he’s still seeing momentum in the Chicago housing market, but the level of excitement definitely is muted.
“I don’t see a lot of urgency at all,” Shenfeld said. “”Some people feel the market is going to stabilize or there might be a downshift in the market and we haven’t seen a bottom.”
With the credit gone, listing agents are stressing to their sellers the three fundamentals that will get a home sold: Location, condition and price. The volume of inventory — even inventory with reduced prices — is far greater than the demand for it in some communties. Worries about an anticipated rise in foreclosure listings is also dogging the market.
“It is definitely a declining market, and there are so many properties out there to choose from,” said Christy Alwin of Dream Home Brokerage in St. Charles. “People can pick apart a beautiful property and find the one flaw, because there are 20 more out there. In order to combat that, you just have to keep reducing your price.”
David Frede is among the buyers hoping to take advantage of more desperate sellers.
Eight months ago, Frede and his wife, Rosa, put their East Wicker Park condo up for sale and started looking at properties in the northwest suburbs. After three months with no offer on their own place, they opted to suspend their search.
In mid-March, they accepted an offer — from a buyer seeking the tax credit — to sell the three-bedroom condo for almost 93 percent of their asking price. With the transaction recently closed, the couple and their daughter, Isabel, are living with Rosa Frede’s parents, house-hunting on weekends and finding they’re able to buy a lot more house than they thought.
“We’re seeing some prices that the listing history went from $1 million to the $500,000s,” David Frede said. “Even though I sold at the bottom of the market, if I sold my house at the top of the market, I couldn’t afford that house [before]. Me just coming on the market may give me a little more leverage to negotiate my own credit.”
Gary Leavenworth, a Naperville real estate agent with his own firm, just took a few new listings this week, and remains optimistic about the summer sales season. “A lot of cars have been sold since Cash for Clunkers,” he said.
