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Real Estate Industry Overview

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With 2008 in the rearview mirror, it’s a good time to look back, as well as look forward, at the real estate industry.

• Approximately 100,000 real estate agents left NAR between the third quarter of 2007 and the third quarter of 2008. In the third quarter 2007, NAR’s membership was 1,338,001.
   
• NAR forecasts existing home sales totaling 4.96 million in 2008, rising to 5.19 million in 2009 and 5.55 million in 2010. NAR forecasts new-home sales at 486,000 in 2008, declining to 393,000 in 2009 and rising to 446,000 in 2010.
   
• Housing starts, including multifamily units, will probably total 934,000 units in 2008, easing to 731,000 next year before increasing to 772,000 in 2010, according to a NAR report. Residential construction spending is down 23.4% from a year ago.
   
• In December, the Fed cut its key interest rate to a range of zero to 0.25%. This brings the interest rate that banks charge each other to the lowest level on record.
   
• Record low interest rates drove demand for home loans to its highest level in more than five years. On the week ending January 9, 2009, the seasonally adjusted index of mortgage applications, for purchasing and refinancing, increased 15.8% to 1,324.8. That’s the highest reading since the week ending July 11, 2003, when it reached 1,358.2.
   
• For all the renewed interest in refinancing, about 12 million households, or 15% of owners of single-family homes, are not eligible. Their mortgages exceed the value of their home.
   
• In the third quarter of 2008, the Standard & Poor’s/Case-Shiller home price index fell 16.6% from the same period in 2007. That eclipsed the previous record of 15.1%, set during the second quarter of 2008.
   
• In December, the largest monthly drop in asking prices occurred in Las Vegas with a 3.6% decline, while Salt Lake City was up 1.0% for the month of December and Houston was up 3.1% during the fourth quarter. Nationwide, Charlotte, Dallas and Houston were the only markets showing price stability during the fourth quarter of 2008.
   
• At the end of 2008, U.S. foreclosure activity had jumped 81% from 2007 and 225% from 2006. According to a RealtyTrac report, a total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 2,330,483 properties. The report also showed that 1.84% of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03% in 2007.
   
• NAR is actively pursuing legislation to restore the housing sector. The bill, H.R. 384, aka the TARP Reform and Accountability Act, would enact a mortgage buy-down program to reduce interest rates, increase foreclosure prevention and mitigation efforts, and provide needed liquidity to the residential mortgage markets to ensure that financing is available. “It is imperative to get TARP back on track by targeting funds for mortgage relief, which will help lower mortgage rates and reduce foreclosures,” said NAR President Charles McMillan.