Q1 home prices down 17 percent

By Lisa Bernard-Kuhn • lbernard@enquirer.com • May 12, 2009

Sale prices of single family homes in the region slid more than 17 percent in the first quarter – fueled by the sale of foreclosed properties and other discounted real estate, according to a national report released today.

In Greater Cincinnati and Northern Kentucky, the median sale price fell to $106,500, a 17.1 percent decline from the first quarter in 2008, according to data from the National Association of Realtors.

The median sale price is the point at which half the homes sell for more and half sell for less.

Nationally, the median sale price for a single family home slid to $169,000, down 13.8 percent from the first quarter of 2008.

Overall, sales dipped 3.2 percent from the year-ago period.

“I think we’re near a bottom, but we’re not there yet,” said David Resler, chief economist at Nomura Securities.

While prices could hit bottom as soon as this summer, he said, they are likely to remain stable and start edging higher slowly. But the nascent signs of recovery in the housing market could be short-lived if employers continue to lay off workers in bulk.

First-time buyers accounted for half of all purchases during the first quarter, and 134 out of 152 metropolitan statistical areas reported lower median existing single-family home prices compared to the first quarter of 2008.

The biggest drop, of more than 50 percent, was in Fort Myers, Fla. Prices fell 40 percent or more in Saginaw, Mich.; Akron, Ohio; San Francisco; San Jose, Calif.; Phoenix; Sarasota, Fla. and Riverside, Calif.

The biggest price gain, of more than 21 percent, was in Cumberland, Md. The only other metro area that saw a double-digit increase was in Davenport, Iowa, which saw the median price climb nearly 14 percent.

“We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other,” said Lawrence Yun, chief economist for the national Realtors, in a release. “In many cases, homes are selling below replacement construction costs, which speaks to the great values in the current market.”

In the first quarter, short sales and foreclosures accounted for nearly half of transactions, weighing down median home prices in most markets.

Short sales occur when a bank or lender agrees to accept less that what is owed on a home mortgage. The discounted properties along with foreclosures sell for about 15 to 20 percent less than market rate homes, Realtors say.

Yun said the $8,000 tax credit for first-time buyers included in the economic stimulus package signed by President Barack Obama earlier this year should boost sales.

“We expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas,” he said.

The Associated Press contributed.

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