While many Realtors remain positive about the prospect of sales of new and existing family homes and condos for the spring season, an increase in mortgage interest rates, strict lending standards, and the gradual withdrawal of investors from many major metropolitan areas have produced a triple threat for home sellers, says Daren Blomquist, vice president at RealtyTrac. “We’re already seeing some evidence in a few markets that some prices are going into negative territory,” he says. The good news for those who do qualify for a mortgage: There are still competitively priced homes for first-time buyers, Blomquist says.
Here are seven markets where existing home prices dipped — even slightly — in the first quarter, according to data released to MarketWatch by RealtyTrac:
Oklahoma City, Okla.
House prices in Oklahoma City dipped 1% year-over-year in the first quarter after a 5% fall in the fourth quarter of 2013, according to RealtyTrac. Oklahoma had an extremely cold winter. And higher health-care payments under the Affordable Care Act impacted some of her clients, says Leslie Thomas, real-estate agent with Keller Williams Realty in Central Oklahoma. “I had individuals who qualified for one home, but who were not able to qualify for the same home after their insurance was adjusted,” she says. Thomas expects the market to pick up in the second quarter and has seen “multiple offers” for one property. Meanwhile, institutional investors in Oklahoma have remained steady. They accounted for 7.6% of all sales in the first quarter of 2014 versus 7.8% a year earlier.
There was a 1% annual dip in Jacksonville in the first quarter of 2014 after a 15% rise for both the third and fourth quarters of 2013, according to RealtyTrac’s sales price data, which is derived from public record sales deed data that includes all property transactions publicly recorded. “Homes are priced competitively, but we have a higher demand than inventory,” says Melanie Green, spokeswoman for the Northeast Florida Association of Realtors. Green says prices for new and existing condos and single-family homes (sold through a Realtor) actually rose 2.7% on the year in the first three months of 2014. However, RealtyTrac’s median prices are based on the sales price on the deed, which includes sales not listed on “Multiple Listing Services” — the industry’s main database that also includes information available only to real estate professionals — such as third party purchases at foreclosure auction and bulk transactions between investors.
Existing home prices in Tulsa fell 2% in the first quarter of 2014 after falling 3% in the third and fourth quarters of last year, according to RealtyTrac; prices there rose 6% in the second quarter of 2013. “Those statistics are fairly accurate in reflecting the market as it pertains to my experience,” says Frank Petrouskie, a Realtor in Tulsa. “I think we’ve been delayed by about six weeks for the spring selling season and I’m now seeing more houses come on the market. But the last quarter of last year was a very strange environment. There wasn’t much inventory out there but there wasn’t much demand either.” Retail investors have become more skittish in recent years and there’s a slight imbalance in market expectations, he says. “Buyers seem to be a bit more cautious and sellers seem to want a little more than the market can bear.” Institutional investors accounted for just 2.4% of all sales in the first quarter versus 10.3% a year earlier.
Greensboro-High Point, N.C.
There was an 8% drop in existing home sales in Greensboro-High Point, N.C., after a 2% rise in the fourth quarter, RealtyTrac found. “There’s still a lot of uncertainty about the economy,” says Tommy Camp, president and CEO of Berkshire Hathaway HomeServices Yost & Little Realty. “Some buyers say, ‘We’ve got a job, but we don’t know how secure that is.’” A slowdown in household formation has also had a negative impact on the housing market, he says; 18- to 34-year-olds account for more than half of missing households — that is, Americans who would be owning or renting a home now if prerecession economic trends had continued. But while the overall volume of sales was down 12% from January 2014 to April 2014, sales of new and existing homes sold by Realtors were up by around 5% on the year during the same period, Camp says.
Home prices fell 2% in the first quarter in Lancaster after rising 2% in the fourth quarter. Institutional investors made up just 1.4% of sales in that market in the first quarter, down from 7.6% for the year-earlier period, according to RealtyTrac. Some Realtors remain more optimistic than RealtyTrac’s figures, however. “We’ve weathered the storm with less dramatic effect compared to the rest of the country,” says Susan Allison, a Realtor based in Lancaster. “We just didn’t have the same level of layoffs or unemployment or foreclosures or distressed housing,” she adds. The first quarter of the year was slow for everyone with regard to pending sales and home sales, especially with interest rates trending upward. Still, Allison says house prices sold by Realtors rose 3% in the first quarter year-over-year.
Des Moines-West Des Moines, Iowa.
This market had a slight 1% drop in the first quarter after a 5% rise in the fourth quarter of last year, Blomquist says; during the same period the share of houses sold by institutional investors fell to 0.6% from 7.4% a year earlier, taking a significant amount of demand out of the market. David Peers, chief operating officer for Berkshire Hathaway HomeServices First Realty in Des Moines remains far more optimistic. “Our biggest challenge is lack of inventory with listings, he says. “That’s driving prices up a little bit and creating multiple offers on a lot of our listings.” The number of listings is around half of its usual volume, he says. “New construction has really taken off in the last six weeks now that the frost is out of the ground.”
Virginia Beach-Norfolk-Newport News, Va.
Sales prices in this area of southeast Virginia — which includes miles of waterfront properties — have wobbled over the last year, according to RealtyTrac’s data, falling 5% in the first quarter of this year after rising 3% in the fourth quarter, and falling 1% in the third quarter. “Our area has a lot of military and the government shutdown in November was really hard on us,” says Chantel Ray, a real-estate broker in Virginia Beach. “We definitely had a lot less calls all across the board. Sales were down in November and December, which then effects January and February.” However, Ray says prices have been improving since then. “With all of the factors combined, we’ve seen a slight lull in the market,” says NAMB’s Frommeyer. “However, housing starts are on the rise which will boost inventory.”