Economic Update – Residential Market Burns Off a Little Inventory

Is it possible that some of the worrisome inventory of unsold houses nationwide is now, slowly, starting to be sold off? The National Association of Realtors said on Tuesday that pending home sales rose 6.3 percent in December from the previous month, with gains concentrated in the South and the Midwest. Or is that just a weird little uptick on the longer road to lower sales and a continuing residential real estate slump? Economists do not agree on the matter, as usual. But the fact is that anyone still in a position to buy a house can do so much more cheaply than only a year ago: the median U.S. home price in December 2008 was $175,400, down from $207,000 a year earlier, according to the NAR. That median is back down to where it was in mid-2003, toward the beginning of the housing bubble. Wall Street seemed pleased by the housing numbers, whether they’re a mirage or not. After a slow start in the morning Tuesday, the Dow Jones Industrial Average advanced into positive territory and ended up 141.53 points, or 1.78 percent, putting the index above 8,000 again. The S&P 500 saw a gain of 1.58 percent, and the Nasdaq was up 1.46 percent. Even California has seen a modest uptick in home sales, though the homes tend to be of a modest sort. According to MDA DataQuick, which tracks residential real estate sales in the state, California home sales in December were up 17.6 percent from November, partly reflecting the slide in the median price paid for houses, which was $249,000–down 38.1 percent from the previous December. Million-dollar houses in the Golden State, on the other hand, aren’t trading so briskly these days. According to MDA DataQuick, a total of 24,436 California houses sold for a cool million or more last year; that was down 42.5 percent from a total of 42,506 in 2007. “A lot of home sales in the upper half of the market have been on hold for months, waiting for financing,” said John Walsh, president of DataQuick. Getting jumbo mortgages is like putting a camel through the eye of a needle, it seems.Financing isn’t as great a problem everywhere, however. Down the coast from the markets of California, Chicago-based Emini Equities, which is developing a 27-unit condo project called Ayia Punta Mita about 25 northwest of Puerto Vallarta, Mexico, reports that not as many buyers are interested as previously. But those who are interested tend to be cash buyers looking for the relative bargain that the project offers at $700,000 to $1.2 million a unit, Basri Emini, founder of Emini Equities, told CPN. (Relative to a place like Hawaii, for example.) The project, on the west coast of Mexico, is part of a larger master-planned development by Mexican developer DINE called Punta Mita, which totals about 1,500 acres and includes other residential properties, a Four Seasons resort, a St. Regis resort under construction, and a couple of Jack Nicklaus golf courses. “In Punta Mita, we have a wide client base from United States, Canada and Mexico who aren’t really affected by current market status,” Emini said. “About 95 percent of our closings are cash without financing. Our buyers are purchasing on a long-term basis, to get maximum use of their property.”