For Shawn Fernandes, it’s the quintessential double-edged sword.
Not only did Fernandes and his wife find a new house in anticipation of the birth of their first child, but because of the large inventory of existing homes on the market, they purchased the residence, located in Scituate, Mass., south of Boston, for below its assessed value.
Their good fortune, however, was tempered by the fact their current house, in Marlborough, for which they still are paying a mortgage, awaits a buyer. “We put our home on the market probably three months ago,” said Fernandes, 35, who originally listed the property at between $550,000 and $600,000, and has since reduced it by about 5 percent. Given the market conditions, he admits the house probably was overpriced. “It’s attracting more people now. Houses have been on the market a long time, with sellers’ expectations being far above what the market can offer,” noted Fernandes, who is in Information Technology.
His plight likely is shared by a number of others across the country. According to the National Association of Realtors, the inventory of homes for sale nationally at the end of July rose 2.6 percent from June to 2.75 million homes – up 13 percent from a year ago. Total housing inventory levels rose 2.6 percent at the end of July to 2.75 million existing homes available for sale, which represents a 4.6-month supply at the current sales pace.
David Lereah, NAR chief economist, said the surge in inventory creates “more of a buying market. I prefer a balance between buyers and sellers; that’s where we’re headed. Hopefully we don’t overshoot it and get an excess supply. We’ll be looking out for that. I’d say we’re not in yellow-flag territory,” he said of the rising inventory.
In any event, Fernandes is anxious to get out from under two mortgages. “I thought I could sell my house within 60 days.”
Excess inventory is impacting other parts of the country as well. According to the Florida Association of Realtors, the pace of existing home sales in Florida eased in July. A total of 21,669 existing single-family homes changed hands in Florida in July, declining 8 percent compared to 23,646 homes sold in July 2004.
Florence Tanner, a Realtor with RE/MAX Harbor Realty, Punta Gorda, Fla., points to the “media spotlight” on hurricanes as a primary reason behind a lag in sales there. “I think because of the publicity regarding recent hurricanes, a lot of people are waiting until the hurricane season passes,” although she said she’s uncertain why that would influence the market more this year than others.
While a spokesperson for the Florida association said it’s too soon to call lower sales there a trend, she said instead of receiving multiple offers or “snapping things up within days or hours, homes might stay on the market a little longer.”
Meanwhile, in Massachusetts, where the state Realtors association reported the sales of detached single family homes cooled, sliding 5.2 percent from 14,888 homes sold from April-June 2004 to 14,118 in the comparable period this year, Jeffrey Bastress, owner/broker of StartPoint Realty in Needham, said “the market is definitely leveling out. The high end of any given market seems to be struggling more than the high mid range. But there’s still four to five times as many homes on the market today as there were last year at the same time.”
Bastress cited several factors for the current pace of the housing market there, including companies relocating employees out of town and an exodus to warmer climates. “I don’t think it’s any one reason.”
In California, year-to-date sales outpace past years’, but are moderating compared with last year’s levels, according to the California Association of Realtors.
Leslie Appleton-Young, chief economist of the association, said when potential sellers sense a peak in the market, “there may tend to be an incentive to list so they don’t miss it.” She added that she also thinks buyers, “particularly first-time buyers, may asses the level of prices and decide to take a little more time before deciding to buy, especially if rates consistently start to head up.”
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