Real estate professionals are contending with a bearish housing market following the expiration of the federal homebuyer tax credits, according to a webcast by real estate data company Altos Research.

In a previous webcast at the end of the first quarter, the company pointed out that the market wasn’t seeing the usual springtime bounce in home prices in March compared to last year and inventory was rising at a worrying pace — signaling that the beginning of 2011 could look a lot like 2009.

After the second quarter and into the third, the company said the housing market is worse than most real estate professionals might think.

"Spring housing prices already hit peak in July and are trending down. Inventory is climbing and climbing pretty quickly," said Scott Sambucci, the company’s vice president of data analytics.

Raw inventory in Altos’ 20-city composite, which includes the same 20 cities in the Case-Shiller Home Price Index, was rising past 575,000 units at the end of July — a figure not seen since January 2009. At the same time, median home prices had peaked under $380,000 and were down to about $369,000 at the end of last month, with no signs of abating.

At the end of July, 38 percent of homes in the 20-city composite had seen their prices reduced, indicating what Sambucci called a "moderately weak" market.

The Minneapolis-St. Paul metropolitan area was seeing the largest share of homes with price reductions, at 49 percent, while the Las Vegas-Paradise metro area had the lowest share, at 26.5 percent. Perhaps demonstrating that conditions in Las Vegas had bottomed out and were improving, that metro area experienced a 34.1 percent year-over-year reduction in homes at discounted prices.

Sambucci called the interaction between prices and inventory the "supply effect."

"More supply means lower prices. With the initial stimulus, sellers started to see higher demand, and less of a need to drop prices, but (now there is a higher share of price reductions) in consequence of higher inventory counts," he said.

"Demand has already been pushed forward because of the stimulus," he added.

When the federal homebuyer tax credits were initially implemented in early 2009, home-sale transactions in the middle of the year were effectively stable, but the extension of the tax credits at the end of November had a limited effect, according to Altos’ data.

Listings absorbed, as measured by activity in the previous 90 days, fell to the lowest level in at least two years around February of this year, to 27,500, and then rose somewhat, to 32,500, around the time of the tax credit deadline in April. Comparatively, the market had absorbed 47,500 listings around November of 2007.

After the expiration of the homebuyer tax credits, transactions began falling immediately and were down to around 30,000 at the end of July.

The company recommended real estate professionals obtain very local data to indicate how their market is doing, however.

"Despite general bearishness, some markets are resilient to climbing inventory levels," Sambucci said, citing Birmingham, Ala., and Pittsburg, Pa., as examples.

"If you don’t know what’s going on locally, you’re probably leaving money on the table when it comes to your real estate events or real estate transactions," Sambucci said.

A separate report by online brokerage ZipRealty found that almost half of homes for sale had their prices cut in July in a sample group of markets. Among 26 markets nationwide tracked for the report, 45.8 percent of homes for sale had had their listing price slashed at least once last month, up 2.7 percent from June and up 3.4 percent from July 2009.

"Homebuyers this summer have been on the sidelines, waiting to find deals and bargains; so we’re seeing more sellers slashing their list prices to entice these home shoppers to make an offer," said Leslie Tyler, ZipRealty’s vice president of marketing, in a statement.

The median discount was $18,949, a slight 0.6 percent decrease from June, but a 26.7 percent decrease from July 2009, when the median discount was $25,846. The median listing price in July fell 2 percent month-to-month and 5.4 percent year-over-year, to $254,987. The average number of reductions per listing was 1.99 —  flat from last July and up 1.7 percent from June.

The top 10 metro areas with the highest share of price-reduced listings (percentage of discounted listings; median discount among 26 study markets)

1. Jacksonville: 54 percent share of price-reduced listings; $19,000 median discount

2. Phoenix: 52.7 percent; $16,000

3. Minneapolis-St. Paul: 51.1 percent; $17,000

4. Orlando: 50.7 percent; $20,100

5. Austin: 50.3 percent; $13,000

6. Chicago: 50.2 percent; $20,000

7. Tucson: 49.1 percent; $16,760

8. Salt Lake City: 48.8 percent; $15,000

9. Baltimore: 48.7 percent; $18,000

10. Seattle: 47.6 percent; $23,900

The top 10 metro areas with the lowest share of price-reduced listings

1. Denver: 32.5 percent; $13,100

2. Los Angeles: 39.4 percent; $28,764

3. San Francisco: 40.9 percent; $38,000

4. Miami-Ft. Lauderdale-Palm Beach: 41.2 percent; $27,100

5. Richmond, Va.: 43 percent; $12,050

6. San Diego: 43.4 percent; $31,000

7. Las Vegas: 44 percent; $15,000

8. Norfolk-Virginia Beach: 44 percent; $15,000

9. Houston: 44.3 percent; $10,000

10. Charlotte: 44.4 percent; $13,000

(Source: ZipRealty)

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