SPRINGFIELD (May 9, 2008) The median sale price of existing-home sales - including single-family, townhomes and condominiums for the first quarter of 2008 reflected an all-time high of $98,800, according to the Capital Area Association of REALTORS® (CAAR). Total home sales equaled 668 units during the first quarter of 2008, reflecting a 19.3 percent decrease from the first quarter of 2007.

According to CAAR president, Phil Chiles, ABR, GRI, several factors help to explain why home sales were off during the first quarter. “The harsh winter, tighter credit standards including loss of 100 percent financing, skyrocketing fuel prices and a lack of measurable job growth in the Capital area are all largely to blame,” said Chiles.

“The most surprising statistic in this release is the healthy increase in the median sales price,” said Chiles. Chiles is careful to point out that a statistical increase in the median home price doesn’t necessarily translate into an actual increase in home prices. The median is a typical market price where half the homes sold for more, half sold for less. “Simply put, this is an indication of what buyers were willing to pay across the entire market and isn’t necessarily a true reflection of individual home prices. It is probably safe to assume that a steady, year-to-year increase in the median price is a good sign, but it does not necessarily mean prices are up across the board. Part of this price increase may be a reflection of the loss of 100 percent financing options, which generally translate into fewer first-time home buyers in the market due who generally buy starter homes,” said Chiles.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.9 percent during the first quarter of this year, down slightly from the 6.2 percent rate in the first quarter of 2007.

According to Chiles, although current inventory levels and mortgage rates are very attractive and home prices are still very affordable, buyers are not near as plentiful as we would like. “Announcements like the one made by the Blagojevich administration last week, indicating his intent to move 150 jobs out of Springfield, don’t help. This potentially means 150 fewer families realizing the American dream of homeownership in our community. This has a trickle-down effect on the entire market and could have more far reaching consequences if local consumers hesitate due to the uncertainty in the government job sector,” said Chiles.

At the end of March there were 1,755 homes available for sale, the highest level of inventory on record for this time of year, and only ten units ahead of the same period of time last year. This reflects a 5.5 month supply of inventory at the current sales pace. “The simple fact remains that there are too many homes on the market right now and not enough buyers,” said Chiles. “This surplus of inventory should keep prices low as sellers continue to be pressured in this competitive market. Usually, there is a direct, inverse relationship between inventory and prices. The more homes we have on the market, the more pressure there is on sellers to keep prices down. For this reason, we do not expect home prices in the area to increase greatly in the near future,” said Chiles.

“The average cumulative days on market (CDOM) for homes that have sold is perhaps the best indicator of the true market condition. In a balanced market, the CDOM should be around 90 days. The first quarter of 2008 shows a CDOM of 127, which is reflective of the high inventory we now have and significantly higher than the 97 CDOM during the same time last year. We continue to be in a fairly strong buyer’s market, so sellers will need to price their properties aggressively to beat the average CDOM,” said Chiles.

The Capital Area Association of REALTORS® is the Voice for Real Estate in the Capital Area representing more than 700 members involved in all aspects of the residential and commercial real estate industry. The Capital Area’s Resource for Real Estate Information can be found at www.SeeHouses.com.

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