The real estate market and particularly home selling prices have been all over the news this past week as three major organizations released their latest reports on the market. Case-Shiller was the first, trumpeting that the home price decline is slowing. The Federal Housing Finance Agency came next announcing that the ‘pace of decline lessens considerably’. This was followed by the National Association of Realtors report that said home sales increased in April. All of this prompted the National Association for Business Economics to state that “there are emerging signs that the economy is stabilizing” and a survey of their members found that they expect the recession to end soon and they are predicting a rise in the GDP in the second half of the year.

The Case-Shiller report showed that the price of a single family home was down 18.7% in March compared to a year ago but the decline was just 2.2% for March 2009 compared to February which was better than expected. Case-Shiller only reports on a composite index of twenty metropolitan areas and uses purchase only information obtained from county assessor and recorder offices. While this index does not track our local home sales data, the good news is that Denver ranked near the top with a 5.7% price decrease compared to the national drop of 18.7%

The FHFA (previously known as OFHEO) is a quarterly report and shows the home selling price index was down 0.5% for the first quarter of 2009 compared to the previous quarter. This was much more modest that the 3.3% decline in the prior quarterly period. When compared to the first quarter of 2008, the decrease was 7.1% The FHFA methodology includes data from 292 Metropolitan Statistical Areas. The Fort Collins-Loveland area maintained a relatively high ranking at #93 with a 0.12% decrease compared to the same quarter a year ago and Colorado is now ranked #13 in the nation with a modest 1.7% decline in price. Our local report to the end of March showed a 0.7% drop in the median price compared to a year ago which is very close to the 0.1% FHFA number.

The NAR report covers sales of existing homes to the end of April and shows that sales were up 2.9% on a seasonally adjusted annual rate but are 3.5% below the pace at the end of April 2008. The national median home price was $170,200 in April which is 15.4% below 2008. Distressed properties accounted for 45% of all sales in April which has really dragged down the figures. On a positive side, the report says that there are more repeat buyers in the market and that the number of buyers looking at homes has increased 14% from a year ago which is consistent with the forecast for sales to be 10 – 20% higher in the second half of this year compared to the second half of 2008.

Our local figures to the end of April showed a 3.8% drop in average selling price and a 0% change in the median selling price compared to a year ago but we have a 23.3% decrease in sales.

Obviously a lot of this comparison is not ‘apples and apples’ but we can draw three conclusions: 1. There is a lot of evidence that the housing market has bottomed out, demand is increasing and prices are stabilizing, 2. Real estate is local – our market is performing a lot differently than most others with a modest drop in selling price and a relatively large drop in homes sales and 3. Selling prices in our local market are stronger than in other areas and with increased demand over the next six months we could see an improvement in sales and prices.

Local home sales posted the best volume month since last September and were up 16.6% from March. In addition, after a precipitous drop in March, the average selling price was back up 5.6% compared to the previous month and almost exactly the same as April 2008. The median selling price for the month was up 2.8% to $220,000 and the days on market for the April closed sales improved to 118 from 125 in March.

The inventory of homes for sale increased just 2.5% to 1,986 active listings and is about the same as the 2,044 homes listed for sale a year ago. Based on the previous twelve months of sales this is an eight month supply which puts the balance of supply / demand into the buyers’ column but this varies drastically by price range. Almost 80% of our market is for homes priced below $300,000. In this price range there is a 6.5 month supply which is considered a balanced market between supply and demand. From $300,000 to $500,000 the inventory is equivalent to a twelve month supply, from $500,000 to $1,000,000 there is a twenty month supply and the sixty five homes listed for more than $1 million represent a forty month supply based on the demand over the last twelve months.

Compared to other areas in our region, our market is favorable. Loveland and south Larimer County has a similar drop in sales at 22.5% but the average selling price is down 11% and Greeley and Weld County have a better sales performance with a 7.1% decline for the year to date but also with a 10% drop in the average selling price. Home sales in the metro Denver area were very similar to the Fort Collins area. Sales in April were up 5.7% from March and down 20.5% from April 2008. Prices were up 3% from last month and down5.6% from a year ago. The inventory of homes for sale remained steady with the previous month and is down 21% from last year.

The bad news of course is that we are still struggling compared to previous year’s sales. For the first four months, sales are down 23.3% from last year and are off a full one-third from 2007. Total dollar volume is down almost $100 million and we are on a pace for annual sales of less than 2,500 homes, a level not seen since 1990.

The market peaks over the next four months with the period May to August accounting for nearly 50% of annual sales. Last year there were 1,460 closed sales during this period and there were 1,705 the year before. Considering the 688 closed sales we had for the first four months, reaching anywhere near last years sales is going to be a real challenge. It is more likely that the 20% – 25% drop in sales will continue and we will finish the period with 1,100 to 1,200 sales. But if you are a buyer you can change this and help all of us – including yourself – by taking advantage of this ‘perfect storm’ of opportunity. Mortgage interest rates are a record lows; there is a good supply of well maintained homes very moderately priced and, for first time homebuyers, there is that $8,000 tax credit that expires in just over six months. To get moving, call a real estate professional today.