NEW YORK (Reuters) - While the data says “no end in sight” for the housing crisis, real estate agents are beginning to see signs of life among people looking for homes to buy around the United States.
It’s too early to talk of a trend, but lower house prices and mortgage rates are bringing buyers out of hibernation, at least in some markets. Provided sellers are prepared to cut prices, buyers are willing to bid, real estate agents say.
“If you’re not going for pie-in-the-sky type of numbers and price your house accordingly, I think that they’ll go pretty quickly,” said Victoria Hanbury Howard, a real estate broker at Coldwell Banker in Washington.
Brokers report the same story in several other places, according to real estate companies with a wide reach like RE/MAX International Inc and Coldwell Banker Real Estate LLC.
If this anecdotal evidence proves durable, it could mark a turnaround from one of the worst downturns in the housing market in a century.
The pulse is faint, though, which could indicate stabilization rather than recovery. Added to that, banks demand larger down payments and clean credit, to avoid more of the mortgage defaults and foreclosures that have plagued the market for the past year.
Once past those hurdles, buyers are finding choice is plentiful and they are looking for bargains.
Among those drawn by the lower prices and mortgage rates are Kristen Werner, a 30-year old attorney for an insurance company, and her 32-year-old husband James, who said they are now looking seriously for their first home after a lull of several years.
A pre-approved mortgage and the fact that they don’t have a home to sell should smoothe the process, and the volume of unsold homes where they are looking — on Long Island, in the New York suburbs — means they are more likely to find a house they want.
But, in a caution for sellers, the Werners are coming in with expectations of a bargain.
“We need something that’s in move-in condition — I’m not Martha Stewart and my husband’s not Bob Vila,” Kristen Werner said, referring to a domestic style-setter and the presenter of a home remodeling show.
“I just feel that in today’s market we can be a little pickier than maybe five years ago, and the seller has to put their house at market value and not inflate the price.”
Spring is typically when buyers like the Werners start looking in earnest, and it often sets the tone for the rest of the year. With the economy on the brink of recession, economists are watching developments this spring more closely than ever, looking for signs of recovery.
Some real estate brokers are seeing those signs.
“There’s definitely more traffic,” Patricia Giambalvo, a real estate agent with Realty Executives said at an open house in South Huntington, a town in the New York suburbs, on April 6. “A lot of sellers have adjusted their prices,” she said.
At another property on Long Island, in the town of Bayshore, more people came to an open house than to any of the ones held there since it was listed in September, she said. The sellers cut the asking price, which was originally $439,000, to $384,900 and the open house netted a bid $10,000 below that.
Prices and mortgage rates are now low enough to lure buyers, Giambalvo said. Government steps to thaw mortgage lending are helping. And cautious lenders “now are making sure that people can definitely afford what they’re doing.”
The same is true in many other places.
Jack Kreider, executive vice president of regional services at RE/MAX International, said that while it is too early for anything but anecdotal evidence, some of his company’s real estate agents are convinced they have seen bottom.
The broker in charge of several RE/MAX offices in Orange County, California, for example, has reported that sales volume was double in March what it was in February, and homes under contract are double in April what they were in March, said Kreider, who is based in Denver.
“Yes, this is definitely seasonal activity, but I can assure you that a year ago we weren’t doubling what we did the month prior. You had the same kind of trend, but the fact that it doubled is significant. It wasn’t that big a year ago.”
Some open houses in trouble spots like Phoenix and Tucson, Arizona, and Las Vegas, Nevada, are pulling in multiple bids, he said. “It’s been 18 months to two years since they were getting multiple offers.”
Brokers for Coldwell Banker in several parts of the United States report similar increases in the number of houses selling, a spokesman for that company said.
The main attraction is low prices and mortgage rates.
Standard & Poor’s Case-Shiller National Home Price Index, which covers over 70 percent of U.S. homes, sank more than 10 percent from the peak in the second quarter of 2006 to the end of 2007.
And 30-year home loan rates average 5.88 percent, down from 6.22 percent a year ago, according to Freddie Mac. This year’s rates are holding lows last seen consistently three years ago.
Also helping are government moves to raise both the size of mortgages that Fannie Mae and Freddie Mac — the two largest home funding companies — can buy and the size of loans the government insures through the Federal Housing Administration.
“I’m seeing a lot more young purchasers,” said Lauralee Ensign, owner of a Century 21 office in Fairfield, California, midway between San Francisco and Sacramento, which has been relatively hard hit by the housing downturn.
The average sale price has slumped to $342,000 from $470,000 a year ago, she said, but homes priced under $350,000 are now seeing multiple offers. “The phones are ringing, multiple offers, more showings, just a lot more activity than we were having,” she said.
Ensign said she was hoping this marked a turn in the market and not a false start, such as happened last year. “There were a couple months in 2007 that we got excited.” she said.
Indeed, the obstacles to recovery are substantial. There were about 4.5 million homes unsold in March, well above levels where the market is considered balanced between supply and demand.
“We have to work through inventory, have to have consumer confidence back to where people don’t think when they buy this year it’s going to be worth less next year,” said Chuck Dannis, president of Crosson Dannis Inc, a national real estate appraisal and consulting firm based in Dallas, Texas.
To help push that inventory, Century 21, another brokerage with national reach, has declared April to be National Open House Month in April and are conducting 221 percent more open houses this year than last.
Their targets are people like Nick and Laura Partee, who were at an open house in Alexandria, Virginia, on April 6.
They would like to move up to a house in the $450,000 to $550,000 range, but are held back by concerns about the price their current home, which they described as a “starter,” will fetch. “If the prices stabilize, we’ll probably begin to shop for a new house with the intent to buy instead of just browse,” Nick Partee said in an email later.
Until then, he said, they are just looking.
Reporting by Lynn Adler; Editing by Eddie Evans