Boardman, Ohio - Even though foreclosure case filings in the State of Ohio set a record for new residential and commercial filings in 2009, the MVHI median price for a home here in the Valley continues to rise for the fifth straight month from it's low of $57,300 in September of 2009 to $62,740 for February 2010 according to data released by RE/MAX Valley Real Estate.
This is indeed good news for Valley homeowners, however, the sobering truth is that this new level equals the level at which the index stood in September of 1995 at the very start of the real estate big bang we now call the 'housing bubble' - fifteen years ago. (See full MVHI Report)
Al Leonard, CEO of RE/MAX Valley Real Estate said, " We hope we're seeing the beginning of a welcome process that signals a halt to the erosion of value to area homes. Since January of 2006 our Valley's homes have lost 25% or more of their original or appreciated value. This new upward movement in home prices is good news not only for home owners in the tri-county area but for our economy here in general."
Although the Median Home Price (MSP) trends upward, there may still be some dark clouds over the horizon for Valley housing. Even as home values increase, the total number of monthly sales (SAI) continues to shrink as the already bloated inventory of homes on the the market swells even more.
The ratio between sales and inventory gives rise to the Absorption Rate Index (ARI) which now stands at an adjusted rate of 12.9 months (up from 12.8 mo. in January) for our Mahoning Valley. A balanced rate of absorption is generally considered to be only about a six month supply of inventory. With an absorption rate of over a year, the probability of selling a home in the Valley within 90 days is now less than 21.9% (nearly 5 to 1 against). In a balanced market, the odds would be even.
Leonard said, "In a healthy real estate market, home prices, home sales, and absorption rate will all be seen to move forward together in a close 'cause and effect' harmony. Home values will increase as sales increase and inventory is depleted. What we are seeing, however, is quite the opposite, but the reasons aren't too complicated."
"Yes, there are a record number of homes on the market, but we're over loaded with poor quality distressed properties. The number of quality homes available to buyers has actually decreased. Therefore, demand for a quality home as opposed to a fixer-upper or bank owned foreclosure in poor condition (for which home loans are difficult or impossible to get) is driving market prices higher."
"This is a simplified answer to a complex process, but doesn't change the fact that our market overall is still out of sync - and we wonder what will happen when the Tax Credit is gone."
"In any event, we saw that interest rates, although still near record lows, moved higher last week as well as our home prices. Predicting the bottom of a free falling market is always risky, but it sure looks like the worst is over. Now is the time for buyers that have been waiting for the bottom to make a move. First time buyers and qualified move-up buyers have less than 60 days to take advantage of the existing tax credit. This opportunity will likely never come again," Leonard advised.
It's easy to be a buyer in this market but an arduous task for sellers. Leonard tells sellers that to sell their house, "It's got to look better than everybody else's on the block, including the homes not for sale. Work on curb appeal outside; and inside, de-clutter, clean and paint. Most importantly be honest about your price!"
