If you’re in the market to purchase a home, this may be the time to find that dream home you’ve wanted to buy. For the first time in six months, the National Association of Realtors reported a 2.9 percent increase in existing home sales. This was an unexpected increase, despite continued job losses and the lowest consumer confidence levels in five years.
Despite this good news, home prices also reported the sharpest drop as sellers cut prices and as the country saw an increase in foreclosures. Home prices fell a record 10.7 percent to an average price of $195,000, with some markets such as Miami and Las Vegas taking hits of over 19 percent. These cities, along with those such as Phoenix, Detroit, and San Diego are being punished for years of speculation and overbuilding. Some attribute the increase in existing home sales to desperate sellers and an increase in foreclosures.
What’s interesting to note is that areas such as San Francisco only saw a 1 percent decline in home prices. Many parts of the San Francisco Bay Area have been relatively insulated from the housing meltdown. Areas such as Cupertino, Saratoga, Los Altos, Palo Alto, and Hillsborough continue to withstand housing pressures. These areas are located in highly desirable school districts, and many residents in these areas work in higher income, recession-resistant professions.
Despite the decline in home prices, many believe the bottom of the home market may only be two or three quarters away. Combined with the lowest Fed interest rates in years, this is a prime opportunity to purchase a home, especially as summer approaches and more homes will be put on the market.
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