In an apples-to-apples comparison, April 2011’s home sales might just be the best month in a decade.
Van Eaton & Romero Chief Executive Officer Bill Bacque’s number crunching for his monthly residential market analysis shows that while numbers are down for each month of 2011, except for February, we may actually be up. If you back out some anomalies.
“To put this into proper perspective, one must remember that in 2010 the federal government, in an effort to stimulate anemic national housing sales, was offering a hefty tax credit of either $6,000 or $8,000 to anyone who bought a home,” Bacque says. The higher tax credit amount was for first-time homebuyers, the lower for previous homeowners purchasing another home.
The tax credit was also in effect for a limited period of time. Buyers had to have contracted to purchase their home by no later than April 2010 but had until June 30, 2010, to close the sale. The effect of the tax credit, according to Bacque, was to inflate home sales in the first half of 2010, which he illustrates on Page 2 of his monthly report. “Naturally, it also had the effect of dropping the level of home sales after its June 2010 expiration,” Bacque notes. “That is also clearly evident in the graph when looking at the monthly home sales following June 2010 and for the remainder of the year.”
That means 2010 sales through June clearly were an anomaly. In Bacque’s assessment, 2011 monthly sales, with no tax credits, should be expected to underperform 2010. Data he gathered from the REALTOR Association of Acadiana’s Multiple Listing Service shows the April 2011 housing sales were down over 20 percent from April 2010 and are off by 13 percent for the year.
But going back a decade he found that the 214 home sales reported in April 2011 were higher than the April reported sales in six of the last 10 years (as far back as he started breaking out Lafayette Parish), the other exceptions being the post-Katrina years of 2007 and 2006.
“Take these out of the equation, and April 2011 home sales would not be classified as a ‘good’ but rather as the ‘best’ month in the past 10 years,” Bacque says. “Sometimes bad is really good.”
The same trend emerges when looking at dollar volume on Page 4. April’s 2011 closed dollar volume was down by just under 6.25 percent compared to April 2010. However, April 2011's $46 million in closed dollar volume has only been bested in two of the past 10 years (2010 and 2007). Cumulatively, the $127 million in 2011 sales volume has only been bested in three of the past 10 years (2010, 2006 and 2007). Additionally, the average sale price of homes is up over 2010, Bacque notes, and the median sale price is unchanged. “This is indicative of a resurgence of buyer interest in upper-priced homes, those $300,000 and up,” he adds.
View his full report here.