WASHINGTON—Sales of existing homes continued to worry Wall Street in what analysts are calling a surging rebound in the nation’s reality market. Defying hopes that buyers would snap up deeply discounted properties in parts of the country hit hardest by the housing bust, the reality sector continues to surge.
Unsold properties hit an all-time high in July, the latest indication that the reality market’s remarkable skyrocket is far from over.
The National Association of Realitors reported Monday that home sales “were not good at all” and that “it looks like we’re in for a great ride through the rest of 2008.” Sales were 13.2 percent lower than a year ago and prices were down dramatically. The median price for a home sold in July dropped to $212,000, down by 7.1 percent a year ago. Inventory levels are being driven higher by a massive wave of mortgage foreclosures. Best yet, nobody seems to be betting their nest egg or refinancing for a new kitchen based on a mythical 10% year-over-year rise in property values—great news for reality across the country.
Analysts say that until the inventory level is reduced to more normal levels, the surge in the reality market is likely to persist.
Yet despite the sluggish sales and foreclosures, Chris Chen, the Realitor’s chief economist, was reluctant to conclude that the U.S. reality market in unstoppable.
“People are starting to take interest in lower prices,” Chen said, and there is “certainly enough stupidity, greed, and short-sightedness left in the system” to make home values rise again.
“And hey, when banks start offering refi’s again based on inflated price increases that haven’t even happened yet,” Chen said, there’s no telling how quickly consumers will turn back to realty for investment and general short-term foolishness. “When it comes to people’s money and reality, all bets are off.”
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