Home Prices
Decrease in Some American Real Estate Markets
It may not actually be the
beginning of the end of America's real estate
boom, but one of the first indications of a
slowdown in the housing market is when homes begin
to take longer to sell. Although the National
Association of Realtors doesn't keep track of the
nation's overall home marketing times, but there
has been a dramatic rise in the number of homes on
the market in the past six months. With the supply
of available houses rising, buyers have more homes
to choose from, and according to the laws of
supply and demand, that means prices in many areas
of the country may begin to come down.
Let's look at some areas of the country to examine
trends. In Philadelphia, Pennsylvania, the
average marketing time in June 2006 was 33 days.
That amounts to an increase of ten days from a
year ago. Although the number of sales has
remained steady, there are more houses on the
market--nearly twice as many, in fact, standing at
36,000 units, as opposed to 21,000 the previous
year.
It has traditionally taken longer to sell a home
in Nashville, Tennessee (an average of 65
days a year ago) but that figure has risen to 75
days in the current market. In Des Moines,
Iowa, the average time on the market has increased
from 75 to 82 days, and although prices haven't
fallen, some developers have begun offering
rebates and free upgrades to move their homes more
quickly.
The figures are even more dramatic in some areas
of the country that have been considered hot
markets over the past few years. In Hanover,
New Hampshire, for instance, which experienced
double-digit annual price increases since 2000,
the average time on the market has risen to 125
days. Such startling numbers are likely to begin
affecting home prices in the near future.
In Napa, California, homes used to sell in
two weeks or less, but the average home now sits
on the market for 60-90 days. Although residents
of the area don't seem concerned about Napa’s
overall future, they may begin to see prices
decline as homes continue to take longer to sell.
Other cities are also experiencing longer sales
times. Sales time in Boston has risen from
52 to 58 days, Phoenix now takes about 60
days to sell homes that used to sell in less than
two weeks, and Miami's on-market time has
increased to nearly 40 days, up from 20 a short
time ago.
The bottom line: with on-market times rising
across the country, it's possible that home prices
in many areas will begin to decrease. It also
means that sellers will need to keep a closer eye
on their local markets to make sure their homes
are competitively priced if they want a quicker
sale. As more and more homes begin to show up on
the market, prices will eventually begin to
soften. That's the way supply and demand works.
But for now, our most recent real estate boom may
be ending.
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Copyright © 2006 Jeanette J. Fisher
Jeanette Fisher teaches
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