Distressed Home Sales Pushing Prices Lower

Washington, DC, Feb. 12, 2009--Most metropolitan area median home prices, impacted by distressed sales, trended down in the fourth quarter from a year earlier.

In the fourth quarter, 134 out of 153 metropolitan statistical areas showed declines in median existing single-family home prices from the same period in 2007, pulled down by active sales at the lower end that were driven by foreclosures.

Distressed sales – foreclosures and short sales – accounted for 45 percent of transactions in the fourth quarter, dragging down the national median existing single-family price to $180,100, which is 12.4 percent below the fourth quarter of 2007 when conditions were more balanced; the median is where half sold for more and half sold for less.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said homes and neighborhoods minimally impacted by foreclosures have moderate prices changes. “Distressed home sales have risen from about 38 percent of transactions in the third quarter, meaning people are responding to discounted prices and are slowly absorbing the excess inventory. Buyers clearly see value in today’s pricing,” he said.

Lawrence Yun, NAR chief economist, said the market is clearly depressed from job losses and consumer concerns about the economy.

The largest sales gain in the fourth quarter from a year earlier was in Nevada, up 133.7 percent, followed by California which rose 84.7 percent, Arizona, up 42.6 percent, and Florida with a 12.5 percent increase.

“Once again, we see a pattern of strong sales gains, particularly in lower price homes, in areas with price declines resulting from foreclosures,” Yun said. “For example, in California and Florida, where distressed sales accounted for roughly two-third of all sales, the median price fell by much more as lower priced home sales far outpaced higher priced sales.”

Areas with the steepest declines in single-family home prices, more than 30 percent below the fourth quarter of 2007, include Las Vegas-Paradise, seven metro areas in California, Phoenix-Mesa-Scottsdale, and three metros in Florida. “Clearly these areas are attracting bargain hunters,” Yun added.