Consumer confidence seen as key to home sales
April 10, 2009
SUMMIT COUNTY ” A cautiously optimistic real estate forecast from a national economist this week spurred hopes that the local market could start to see some improvement in the second half of the year ” if consumer confidence starts to recover.
Dr. Lawrence Yun, chief economist for the National Association of Realtors, said he sees signs that home sales volume could rebound 10 to 20 percent during the second half of 2009 compared to last year as inventory and prices stabilize.
Local real estate experts think the transaction volume in Summit County will also bounce back, but they aren’t sure exactly how far. A 10- to 20-percent climb would not even mark a return to pre-2008 volume, said Summit Association of Realtors chair Bonnie Arnold.
As for prices, some local experts think there will still be some softening in price this year, and that will help spur the number of transactions.
Price reductions haven’t been nearly as dramatic in Summit County as in other parts of the country, where real estate values have dropped up to 40 percent.
Referring to statistics compiled by Land Title, Arnold said local property values experienced a “much-needed” market adjustment from the “unrealistic figures of 14 to 18 percent” seen between 2003 and 2007, to a “more sane and stable” 7 to 11 percent.
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“That being said, sellers are much more negotiable and the next set of stats coming out may show those figures decreasing. It will be this trend which will probably produce greater sales volume in the second half of the year,” Arnold said.
Price reductions are more noticeable in some segments of the market, varying by location and price point, said another local real estate expert. Some noticeable drops have been at the low end of the price spectrum, where smaller condos near Dillon are selling for about 10 percent less than a year ago, he said.
Accurately gauging overall trends in local prices is tough for several reasons: lack of good data, a small sales volume that can easily be skewed by one or two transaction and because the market is highly segmented.
“I think 2009 will be a stabilization year and will not see any price increases over 2008,” said Arnold. ” So much is dependent on the lending industry ” and new guidelines and requirements by Fanny Mae ” that predicting anything in the present climate is impossible,” she said.
Arnold said it’s difficult to peg the Summit County market to national trends. But that local conditions compare favorably to other resort areas.
“We are unique as a second-home and resort market and therefore non-comparable to the national market,” Arnold said. “We have weathered this storm much better than other resort markets mainly because of our steady and sane 8 to 22 percent yearly equity growth over the last 21 years.”
The biggest driver for real estate values in Summit County is consumer confidence, according to Arnold. She said consumers may turn to real estate if they think it’s a safe investment.
“I hope that many will perceive the stock market as too volatile and risky and will prefer to put their money in a market that has shown a steady and logical growth,” Arnold said.
Properties under $500,000 make up the strongest segment of the market right now because of conforming loans, she said. The high end of the spectrum is tough because it’s very difficult for buyers to find jumbo loans, and commercial loans are almost non-existent, so that is the weakest segment of the market, Arnold concluded.
Bob Berwyn can be reached at (970) 331-5996, or at firstname.lastname@example.org.