Housing for-sale signs multiplying across U.S.
There is no sign of a broad collapse of housing prices about a year after the once-hot coastal markets entered a long-anticipated cooling phase. But the general level of prices is edging down in some areas and leveling off in others, while the supply of homes for sale keeps rising.
The number of homes on the market in Orlando, Fla., for example, is nearly five times the year-earlier level, while the inventory has quadrupled in Phoenix and Tampa, Fla., and nearly tripled in the Washington, D.C., area.
In another sign of the housing market’s growing weakness, the Commerce Department said housing starts fell 5.3 percent last month from May, to an annual rate of 1.85 million.
One effect of the softening in many markets is that more sellers are willing to dicker. “Let’s make a smoking deal,” John Nichols wrote in a Craigslist.org ad for his three-bedroom ranch house in Sacramento, Calif., this week. He is seeking $315,000 but adds, “Make an offer. You won’t necessarily insult me.” Although the backyard is “currently a dump,” Mr. Nichols says, the kitchen countertops are granite and the dual-pane windows are new.
To examine the residential real-estate prospects for 26 major metro areas, The Wall Street Journal gathered data on inventories of homes for sale at the end of the second quarter from a variety of local sources; pricing trends based on surveys of real-estate agents by Daniel Oppenheim, an analyst at Banc of America Securities in New York, a unit of Bank of America Corp.; and projections of job creation by Moody’s Economy.com, a research firm in West Chester, Pa. Employment trends are among the most important factors in determining demand for housing.
Metro areas showing large increases of homes for sale and relatively weak employment growth include Boston, Los Angeles, Philadelphia and New York.
Among the strongest markets overall are Houston, Dallas-Fort Worth and Seattle. All three areas are benefiting from robust job markets, and modest home prices are drawing investors and new residents to Texas.
In Massachusetts, where the job market is flagging, the median sale price for single-family detached homes in May was down 1.2 percent from a year earlier and nearly 6 percent below the peak reached in July 2005, according to the state’s Association of Realtors. The supply of homes available for sale in May was enough to last 11.3 months at the current sales pace, up from 8.7 months a year earlier.
A June survey of real-estate agents by Banc of America Securities found that home prices had weakened from the prior month in 30 of the 42 metropolitan areas covered. The markets with the weakest pricing trends included Boston, Detroit, Phoenix, St. Louis and Washington, D.C.
In Miami prices have been about flat in recent months, says Ronald A. Shuffield, president of the brokerage firm Esslinger-Wooten-Maxwell Inc. Mr. Shuffield says he expects prices of condos in less-attractive parts of the Miami area to fall slightly in coming months. For condos in better parts of the area, he believes prices during the next year will range from about flat to as much as 5 percent higher.
So many new homes are available on the outskirts of Phoenix that it is “a total bloodbath,” says Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse Group. She doesn’t see a recovery in most major metro areas in the near term. “It could actually get worse before it gets better,” she says.
Conditions can vary considerably within a metropolitan area and among different types of housing. Sherry Chris, chief operating officer of Prudential California Realty, says condo prices in downtown San Francisco are about level with a year ago because new buildings have helped supply catch up with demand. Overall, the number of homes on the market in the Bay Area has more than doubled from a year earlier.