Swamplot’s Greenwood King-watching reader informs us that the real-estate firm’s March survey of home sales in Houston’s tonier neighborhoods is already out — early, this time. And this month the report details separate data for new construction and resales. Snarks the GK watcher:
This is a typical reaction of the Realtors to falling prices. Find a way to re-segregate the market to make the bread and butter look OK. Last year it was “Inside the loop never goes down!†Pretty soon we will see the market cut into “Three Story (-34%) Two Story (-2%) and One Story (-26%) homes.â€
Hmmm . . . not a bad idea! But what about the new numbers?
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Now the report is telling us that only “new construction†high end home prices are down 18% and “resales†are flat on an average price basis? And that alone is responsible for the 11% decline in 2009 so far??? I don’t buy it. Sales volumes down 36% for re-sales but average prices are unchanged?? The quick math works. Transactions -36%, dollar volume -36%. But over and over again, price follows volume in this real estate downturn.
Also notable: the bulk of that drop in new-construction sales prices appears to be coming from the Heights.
- March Houston Market Report (PDF) [Greenwood King Properties]
- Previously in Swamplot: Waiting for Greenwood King To Drop
What’s to snark? I’m not with G-K, but the numbers look about right. It would be helpful to know how the boundaries are defined for ‘Heights’–though their quote for number of sales 1st quarter ’09 vs 1st quarter ’08 looks close to what I’m using.
As of this morning, single family homes listed up to $500,000 in the ‘Heights’ (using keymaps for the general area) have about 7.2 months of inventory; over $500,000 have about 15.1 months of inventory.
There is still business to be done. Sellers must offer a superior product–no more ‘let the buyer paint it, let the buyer change the tile, let the buyer re-finish the floors, fix the foundation/A-C, etc.’ At the same time, buyers must realize that desirable areas like the Heights don’t have foreclosures and short sales dragging down the value and prices. Reasonably conservative offers will find positive responses . . . if the seller really has to move.
Interesting numbers, esp. the Heights. Since the numbers aren’t like-for-like, I wonder how much of the drop is due to developers changing the type of houses they’re building. A lot of the new construction there is right on the cusp between conforming and jumbo mortgages. The maximum conforming loan at an 80% LTV translates to a selling price of just over $520k. Given the current interest rate premium on jumbo mortgages, new-builds that are just a little over this amount are tending to languish on the market, whereas those in the sub-$500k range seem to still be selling briskly.
If I were a developer planning on putting up some $600k+ houses, I might re-think my plans and target buyers who can take advantage of the current low rates for conforming loans.