Boomer’s Blog

The National Association of Realtors (NAR) latest quarterly report indicates prices are rising in one-third of the nation’s metropolitan housing markets, and appear to be strongest in areas unscathed by the subprime loan debacle. As mixed results are reported for many markets, the numbers alone may fail to show the big picture, especially as it is captured by real estate investors nationwide.

Generally, sales for Q1 were the slowest in high-cost areas. At the same time, foreclosures from subprime mortgages rose dramatically, NAR says. The strongest price gains are emerging in neighborhoods with little subprime exposure, and the most dramatic drops are in those where higher instances of subprime lending has led to record foreclosure rates and bargain sales prices.

Overall, NAR says that total state existing-single family home and condo sales in Q1, at a seasonally adjusted annual rate of 4.95 million units, are 22.2 percent below the 6.36 million-unit pace marked in Q1 2007. Single family homes and condos in some markets however, managed to beat the odds and show impressive gains for Q1.

Single Family Home Gains
In Q1, the largest single-family median home price hikes over the same period in 2007 were:

• Binghamton, N.Y. is up 11.8 percent to $109,70;
• Peoria, Ill. is up 10.4 percent to $119,000; and
• Spartanburg, S.C. is up 10.1 percent to $130,300.

Condo Markets on the Rise
The strongest median condo price gains in Q1 over the same period in 2007 were:

• Bismarck, N.D., is up 36.4 percent to $124,900
• New Orleans-Metairie-Kenner area of La., is up 15.3 percent to $170,500; and
• Wichita, Kan. is up 11.7 percent to $106,600.

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The Wall Street Journal reports that 2.2 million vacant homes were for sale in Q1, up from 2.1 million in Q4, and about one million more than was considered “normal” before economic crises permeated the market.

The U.S. homeowner vacancy rate, which tracks the number of vacant homes for sale, jumped to 2.9 percent in Q1, up from 2.8 percent in Q4 2007. According to recent U.S. Census Bureau housing data, the vacancy rate has risen significantly since the housing bubble morphed into the mortgage meltdown. Between 1995 and 2005, the rate sat between 1.5 percent and 2 percent.

Families today are no more likely to own their homes now than they were in 2002, despite widespread opportunities, such as subprime mortgages, that were purported to boost home ownership among borrowers with poor credit scores. Related Census data show that the seasonally adjusted share of homes occupied by owners rose to 67.9 percent Q1, up from 67.7 percent in Q4 – this level peaked at 69.3 percent in 2004. These numbers and the credit crunch fuel more speculation that home prices will continue to drop well into Q4 2008.

While the dream of home ownership has become an Ambien-fueled nightmare for many Americans, data show that droves of families who’ve managed to claw their way out of bad mortgage deals are looking for places to live.

There currently are 4.1 million vacant homes for rent, and the rental vacancy rate edged up to to 10.1 percent in Q1. The rental vacancy rate clearly is on the rise since Q4’s rate of 9.6 percent was recorded by the Census. Analysts say however, that the growing inventory of vacant rentals should keep rent prices relatively stable, and help to temper inflation.

For those looking into becoming a landlord, the Boston Globe offers six rules from the trenches that could save you from financial — and emotional ruin.