Home sales for July ‘sobering’ though not unexpected

With the exit of the first-time and move-up home buyer tax credit, the decrease in home sales in July came as no surprise. However, the fact that sales dropped so dramatically was “sobering,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor Association.

In Boulder County, where the real estate market has remained steady despite the recession, single-family sales dropped 28 percent compared in July compared with July 2009, and its townhome/condominium sales dropped 57 percent. Compared with June, July’s single-family home sales dropped 30 percent while condo/townhome sales fell 44 percent.

Within the city of Boulder, 30 percent fewer single-family homes sold in July compared with the previous year, and 39 percent fewer sold in July compared with June 2010. Nearly 64 percent fewer townhomes/condos sold in July compared with July 2009, and 53 percent fewer sold in July compared with June. Longmont saw 37 percent and 57 percent drops of single-family home and townhome/condo sales, respectively, in July compared with July 2009.

“We really expected a pretty significant pullback,” says Hotard. “We hoped for a bit stronger sales. I think we’re looking at the new normal for the time being.”

Hotard attributes the drop is sales to the end of the first-time and move-up home buyer tax credits that “front loaded” home sales in the spring. Yet the increase in sales this spring and early summer proved the tax credit was needed and helpful, he says.

“If we try to make sense of marketplace, there no significant signs that would point to any kind of rapid growth in terms of home sales,” he says, noting that the national unemployment is at 9.5 percent and credit is still tight, further exacerbating the issue. “Unless and until unemployment comes down, housing sales are going to be stuck at these levels going forward until the end of the year.”

Hotard says that with other end-of-the-year indicators – such as the normal slowdown in the real estate market and holidays that provide a sense of consumer confidence – will provide clearer picture of the market’s immediate future. Until then, lack of consumer confidence, tepid job growth and tight credit will prevent many from entering the market, he says.

On the bright sales, sale prices of Boulder homes remained steady, with some communities even seeing increases in median and average sales prices for both single-family homes and condo/townhomes.

“That’s definitely a good sign,” Hotard says. “The strength of this market has never been in question in terms of the value of real estate. The issue has been people’s ability to purchase. I know there’s demand out there but barriers are preventing people who would otherwise be in the market from actually committing to a home purchase.”