This month we are launching our first ever “Trulia Power Panel” on our blog, where a diverse group of industry experts, insiders and watchers will periodically come together to share their perspective on real estate issues facing consumers.On Monday, the National Association of Realtors (NAR) will release data for August existing home sales. We thought we would have industry experts provide their predictions, analyses and musings on what the data will say. This Power Panel is called “Trulia Hardball: Predictions for August home sales data.”
Our Trulia Power Panel participants are:
- Bill Tancer, Hitwise, GM of Research
- Sherry Chris, COO, Prudential CA/NV/TX Realty
- Jonathan Miller, CEO, Miller Samuel
- Maria Niles, Cont. Editor, Business, Career & Personal Finance, BlogHer.org
- Bob Moles, Chairman, Intero Real Estate Services
- Ira Serkes, RE/MAX Executive
- Ken Jenny, Managing Director & CEO, tranCen.com
- Pete Flint, Co-founder & CEO, Trulia
Given that the NAR forecasts an 8% drop in homes sales for all of 2006, our esteemed participants were asked the following four questions about the August existing sales data:
- What will the August national existing homes sales data show?
- What will the August median existing home price for all housing types be?
- What happened to total housing inventory in August?
- What are your thoughts for the housing market in Q4 2006?
Our panelists see the world of real estate from different perspectives, which shows when you read their answers. Take a look and let us know that you think. Who do you agree with and why? Without further ado, here we go:
Question 1: What will the August national existing homes sales data show?
Tancer – Based on our search term data we are predicting that month-to-month July 06 to August 06, there will be an increase in existing home sales. However, that increase will not be enough to bring us to August 05 levels.
We’ve based this prediction on the predictive nature of the search term query “homes for sale.” The chart below illustrates the point.
There was a substantial increase in searches for “homes for sale” through the month of July. Based on the historical performance of this indicator, we expect a change in direction in existing home sales when compared with the previous month.
Chris – Unit sales will drop even more in August as the rest of the country catches up with the 25% YTD drop CA has experienced. My guess is 15-17% down.
Miller – Down 16.1%
Niles – August 2006 – down 15% from August 2005 and down 5.2% from July 2006. August 2005 sales were incredibly strong and, arguably, the beginning of, if not the peak of, the housing market boom.
Moles – Down 12.5%
Serkes – Different.
Jenny – While the media continues to bash the home sales market and the NAR tries to add unrealistic optimism – the true fact is that the market is trending downward to a point of realistic normalization.
Flint – I believe that sales will decrease year over year to around 12-14%. This is based on the general slowdown on transactions and that August 2005 was the peak of the recent housing market boom.
Question 2: What will the August median existing home price for all housing types be?
Tancer – This is a metric that we are not currently tracking or predicting.
Chris – Median existing home prices will continue to rise ever so slightly in August 06 over August 05 nationally.
Miller – Down 0.4% – a first time annual decrease. I suspected this when the NAR abruptly reversed its optimistic public stance on housing price trends last month which suggested to me that they knew a drop was imminent.
Niles – August 2006 – $233,300 up 1.0% from July 2006. I think the median price will continue to inch upward as buyers bid on the well-priced, move-in-ready homes from the increasing inventory available.
Moles – Up 1%
Serkes – A change from previous periods
Jenny – The trending of prices in this cycle will dramatically lag the decrease in market activity. This is because the overall economy is relatively healthy and the need to sell or buy remains less immediate in most cases with consumers. Hold on price and look for good deals will be the name of the game for sellers and buyers for the next six months at a minimum.
Flint – Given that median house prices has been fairly stable over the last few months, I don’t expect this trend to change for the US data so 0% change. However, the local trends will vary significantly.
Question 3: What happened to total housing inventory in August?
Tancer – This is a metric that we are not currently tracking or predicting.
Chris – Inventory will continue to rise ever so slightly.
Miller – Up 6.3% over last July.
Niles – August 2006 – up 3.6% from July 2006. Inventory will continue to increase as many sellers aren’t yet ready to price according to the changing market conditions and still have hopes of realizing last year’s appreciation.
Moles – Up 4%
Serkes – It is certain to be higher, lower, or the same. A much more critical question to ask is… what changes will you make in your business as a result of a changing market? Careful research has led me to the conclusion that 100% of real estate closings involve a buyer. In this changing market it’s critical that agents brush up on their buyer brokerage systems. And be much more precise about PPP – (Pricing Properties Properly).
Jenny – Inventory will continue to increase both in the resale and new residential categories. The new home builders will have already begun to be more aggressive than resellers and are energizing sales by offering buyer incentives in an effort to decrease inventories. New home builders are speculative in good markets = gamblers, and most realistic in declining markets = not gamblers.
Flint – I expect there to be a relatively small increase on properties on the market, around 2-3% increase in inventory levels nationwide.
Question 4: What are your thoughts for the housing market in Q4 2006?
Tancer – The growing inventory of homes for sale, coupled with housing prices that have not decreased substantially, may lead to a minor correction as home owners find it necessary to off-load their homes. We will be monitoring our search term data closely both in regards to “homes for sale” as well as terms that indicate concern about market correction to predict the market conditions for the rest of this year.
Chris – CA will level off for the balance of the year while the rest of the country plays catch-up to the year-over-year decrease in units sold CA has experienced. Price increases will slow to small single digits as the market continues to balance. Listing inventory will increase in most markets but well priced and well marketed homes will continue to sell. Current and accurate statistical information and forecasting tools will become more important than ever as we lead our agents, clients and businesses through this cycle.
Miller – The fed has overshot their rate target as it relates to housing. The market will see more of the recent trends over the balance of the year in terms of weaker pricing, expanding marketing time and rising inventory with a possible rate cut by the end of the year.
Niles – Continued inventory growth, median price decrease starting to appear and continued sales decrease versus last year.
Moles – I think we will continue to see declining volume and sales in Q4 2006 due to several factors including the typical seasonal slowdown and the elevated inventory levels.
Serkes – We’ll continue to move into a normal market. This will result in many newer real estate agents entering into real estate therapy. Not all of them will successfully be able to withdraw from years of working in an abnormal market to adjust to a 2007 normal market.
Jenny – The housing market is normalizing within a fairly stable economy. The news media has a strong grip on consumer opinions and has been very effective at taking small initial decreases in market activity slowdowns and blowing them up into a national housing dilemma of bursting bubbles. This explains the rationale for a steadily declining housing market in times of affordable and stable interest rates providing steady economic growth.
Flint – Although the overall numbers are an important indicator, it’s what happens at the local level in individual cities and neighborhoods that really matters. Check out our post about how all Real Estate is Local. More tools to help here from Trulia soon!