Why High Prices?
I'll admit it; I don't get it. The National Association of Realtors reports that prices in the nation's housing markets are rebounding. They're still in the negative, down 1.5% nationwide in Q2 2007 from a year ago, but apparently fewer markets are in the negative than in the two quarters before. The NAR's economists call it "flat." Not to mention that they show sales are down 10.8% in Q2 2007 from a year ago.
Here's what I think you don't see in the Realtors' numbers: what kind of houses folks are purchasing. With all the trouble in the subprime mortgage market, guess what? Subprime borrowers aren't buying houses, and those were the lower-priced houses. So what's left? Rich folks -- and that therefore skews the number of homes being sold to the higher price range (remember, they only get the price stat when a home is actually sold).
Now here's the concern, and don't get on me for being all pessimistic, because I'm just talking facts here. These numbers are for the second quarter of this year, before the most very recent hit to the "jumbo" mortgage market (any loan over $417,000). Now if folks trying to get a jumbo on a more expensive home can't get it, and I've already spoken to a few who can't, then that's going to skew the numbers yet again.
I realize this is imprecise math, and just a theory, but let's see.
And check back with the blog in a few, because we're about to report Home Builder Sentiment. I have the embargoed numbers already, and let me just say, not surprising.
Questions? Comments? RealtyCheck@cnbc.com