FB analysts view on housing market

INDIANAPOLIS (WISH) - Pundits can’t stop speculating about the state of the housing market. The latest report from the Commerce Department will only encourage them. The report revealed a slight drop – 0.6% -- in sales of new single-family homes, nationwide. Such sales are down 32.8% compared to May of last year. But, analysts aren’t watching only sales. They’re monitoring prices.

In a New York Times column, one analyst Professor Robert Shiller of Yale – wrote about the fall of home prices. He said “the decline may well continue for some time.” A few days later, Sam Stovall, the Chief Investment Strategist for Standard and Poors Equity Research made a similar declaration on the Morning Stock Talk podcast. “Prices,” he said, “still have at least another 6 months to 12 months to go before they bottom out.”

24-Hour News 8’s Eric Halvorson decided to do some research with the help of the real estate experts in his Facebook friends; also known as his “Real Estate Editorial Board.” Tom Marquis, Senior Mortgage Consultant for Priority Home Loans in Indianapolis said such “perception”- articles can become self-fulfilling prophecies – the reports lead people to believe a problem exists and that “makes it come true.”

Marquis also noted the existence of significant differences in markets “from state to state, city to city, and even neighborhood to neighborhood, in some cases.” So, what appears in national news may not apply directly to every home owner.

Marquis did some research of his own. He found Andy Dittmaier of Central Indiana Realty who said “home prices are not falling.” Dittmaier went on to say, in the Indianapolis market, home prices have been flat for the past five years.”

Jim Morgan of Hansen and Horn said “I really haven’t seen much of a price drop in the market, not here in the Indy area. Of course, there are pockets more affected than others, but according to statistics we haven’t seen much here. However, we also didn’t see the skyrocketing prices up to the downturn that the areas seeing the biggest correction did.”

The comments above do not mean the Central Indiana market is without problems. For example, Marquis found other realtors who say they see falling prices.

John Koppelmann, a realtor in Monticello, wrote, in his area, “home prices continue to fall, although slowly, for a number of reasons. He said some people won’t buy until they believe the market has hit bottom. So, if there are fewer buyers, sellers “may have to accept less.” While that means some good deals for buyers, Koppelmann noted lower prices affect the values of neighboring real estate.

Dittmaier’s message concluded that “most of the neighborhoods that have seen significant depreciation are the entry level production built neighborhoods. Due to the marketing tactics of the builders and the high rate of foreclosures in these particular subdivisions, it is very difficult for an owner in such a neighborhood to sell their home at a price equal to what they paid for it.”

Halvorson’s Facebook panel and others in the industry point to foreclosures as a persistent negative influence on real estate values. A glut of lost homes hurts those that are still owner occupied. Kay Kammeyer of F.C. Tucker in Fishers wrote “until all the bank owned properties and short sale, and foreclosures are absorbed back into the market” the market won’t be able to turn around.

Dittmaier blamed “distressed sales” for the concern about falling home prices. He said those sales “have made up a larger and larger portion of the total sales each year for the past several years. Because so many low priced homes are selling, the “average sales price” is down. That doesn’t mean that a $150,000 home in a secure neighborhood has depreciated. It just means that there are more and more inexpensive homes selling and this affects the overall average price.”

Halvorson’s experts also said homeowners can sell by setting realistic prices. Kay Kammeyer said, of all the homes listed with the Metropolitan Indianapolis Board of Realtors, “85% are over priced.” She’s confident if it’s in good shape and priced appropriately “the home will sell.”

The Commerce Department report does present another challenge for prospective sellers. It said the country has a 10.2 month supply of homes available at the current sales rate.