From WSJ.com
By CONOR DOUGHERTY and NICK TIMIRAOS
Housing Market Slow to Hit Its Spring Stride
Expected Growth Remains Sluggish as Supply Issues Persist
A flurry of recent housing data suggests that the market's spring selling season is getting off to a slow start, a worrisome sign after a winter of expectations that warmer weather would rekindle growth.
Reports from local real-estate agent groups in some of the markets that were the first to rebound, including Las Vegas, Phoenix and San Diego, show year-over-year declines in March home sales. February data for pending home sales nationally—a barometer of early-spring activity—show a decline of 11% from a year ago.
And in markets around the country, fewer people are showing up at open houses. An index of home-buyer traffic in 40 U.S. markets compiled by Credit Suisse was down a little more than a third from March of last year. In some parts of the country, cold weather has put a damper on traffic.
"Overall, even after adjusting for weather, it has been worse than what most people expected," said Tom Lawler, an independent housing economist in Leesburg, Va.
The sluggish start to the spring home-buying season—a crucial period for sales because families typically want to lock into a school district by the end of summer—comes as investors cut back on purchases of homes that can be rented or flipped for a quick profit. Meanwhile, potential buyers are still adjusting to a sharp rise in both home prices and borrowing costs over the past year. With prices and mortgage rates up, the nation's median monthly home payment—including principal and interest—has risen 20% in the past year to about $900, according to John Burns Real Estate Consulting.
The slow spring so far is in some ways a testament to just how swift the past two years of recovery have been. There are fewer distressed properties like foreclosures, and prices of those that remain are higher, so investors are buying fewer homes. At the same time, there has been a continued increase in the number of non-distressed purchases made by ordinary buyers and families, further reducing the inventory of homes for sale.
That has allayed economists' fears that the "shadow inventory" of unsold homes would choke off the recovery.
But there are now two trends at play that potentially could extend a springtime swoon into a summer slump: a dearth of properties for sale in some markets and an abundance of too-richly-priced homes in other markets.
A report released Tuesday by DataQuick, a San Diego research company, showed that Southern California home sales had their second-slowest March in two decades, as rising prices and a thin supply of homes damped sales.
In Phoenix, the supply of homes for sale is adequate, if not ample, but prices are keeping buyers at bay. There, sales of previously owned homes fell nearly 18% in March from a year earlier, while inventories rose 44% to a three-year high, according to the Arizona Regional Multiple Listing Service Inc.
With more inventory, potential buyers such as Sarah Coffeen can afford to be deliberate with their search.
Ms. Coffeen, 31 years old, has been looking for a home in the Phoenix area since January. Her hope is to find a single-family home in the $120,000 range, and until then she and her daughter are living with her parents to help save for a down payment.
Her wait may pay off. While the Phoenix market is still fairly competitive, the inventory of homes for sale has started to tick up, and price gains are slowing.
"I'm pretty much willing to take my time because so much stuff is coming on the market," said Ms. Coffeen, a paralegal. "Prices are definitely down from the fall. I don't know if that mini bubble burst…but homes seem more reasonable now."
Indeed, Phoenix has been one of the nation's hottest housing markets over the past two years, leading the nation in what has to this point been a strong recovery. Now—along with Las Vegas and the Inland Empire region of California that is east of Los Angeles—it is among those cities where many sellers are reducing prices.
For now, real-estate agents see a buyers' market that helps explain the slow spring so far.
Torrey McHale, Ms. Coffeen's real-estate agent in Phoenix, said that when he looks at listings data, he sees more homes for sale and less buyer activity. And when he hits the street with clients, it is harder to get them to close.
"It's been more difficult getting buyers under contract because if they don't like one house they'll just go onto the next," he said. "Last summer was a huge sellers' market. I'd walk into homes with buyers and there would already be three offers on the home. Listing agents and sellers got greedy and start raising prices really fast. I think they did overshoot and now it's kind of turned."
There’s more, graphs, charts and whatnot, read all about it – (a subscription to WSJ may be required) Housing Market Slow to Hit Its Spring Stride
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And for the latest on our real estate market here in the Catalina Foothills and the parallels to what’s happening elsewhere in the country, see >
March home sales, Catalina Foothills
1st Qtr. Home Sales in the Catalina Foothills
Catalina Foothills 1st Qtr. Home Sales at $1,000,000 +
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