The headline in the Des Moines Register Business section today says, "Home prices fall by a record 6.7%." That's in October year-over-year terms, according to the article. The story also notes that October was the 23rd consecutive month during which prices either fell or grew more slowly than they did in the previous month.
According to this article, the previous record decline was 6.3% in April of 1991. On another sunny note, an economist named Patrick Newport with an outfit called Global Insight says that home prices could fall another 10% over the next 12-18 months.
Okay, so that wasn't very much fun to read, was it? Let's see if we can find anything positive. Here's something in a sidebar that says Des Moines-area home prices declined less than 1% in November from a year ago. Still a decline, but not nearly so much as the national average. I have a feeling that is pretty much the case in the midwest at large. Places like Nebraska, Missouri, Minnesota, Illinois, North and South Dakota, Kansas, Indiana, Wisconsin, and the like, are a lot like Iowa - we tend to kind of poke along at a reasonable appreciation rate of 3-4% per year on average. We don't have the wild swings of 10-20% up or down annually like the coasts. Is that a good thing? Well, it sure makes projecting an investment forward a little easier.
Here's another thought, and it's related to my business of Section 1031 tax-deferred exchanges. An exchanger is, by definition, both a buyer and a seller. When the market is down, he or she can take advantage of the situation as a buyer; when the market is up, he or she stands to receive more for the property being sold. Is that a win-win? Well, it's at least an "okay-okay." If you're a smart buyer and a smart seller, it can be a win-win every time. If you're a real estate agent reading this, think about the possibility of trying to find an investor to work with during this market lull, and bring up the idea of an exchange. It could result in both a listing and a sale for you! And if you need a Qualified Intermediary, think about Iowa Equity Exchange.
Ken Tharp
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
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Ken - we wrote about this yesterday on our Lake Tahoe Blog, and will get that up on AR in the am. We weren't surprised, but it's good news for buyers.
best holiday wishes
Ken, be real careful of the headlines. Generalizations are good ways for them to sell newspapers. In my area (Silicon Valley, CA), we still have a sellers market in certain areas where days of unsold inventory are about 40 and buyers market in others where the days of unsold inventory range up to 700! And all within Santa Clara County!
I just do the research for the particular area that a client is interested in to buy or sell and stay as relevant as possible to the client situation and away from the scare tactics. Matter of fact, it seems that when you're front page material to a newspaper or magazine the trend has already changed.
Gary & Richard - Yes, I'm sure this was a national news feed. The dateline was New York. I wanted to try to relate it to our local market. Hopefully I accomplished that.
Tom - Thank you for your comments. I'm not sure whether you read my blog thoroughly. I'm guilty of doing the same to others' blogs, so I'm not casting stones here. The other alternative is that I just did a crappy job of explaining myself. The intended points of my blog were: 1) our local market is doing much better than the national average, and 2) there may be some things that agents (which I am not) can do to take a proactive approach to work around the current situation, even if it is bad in their particular market. And yes, I agree with you that often the media is behind the curve with regard to what's happening. I've been in the local real estate market for 30 years now, so I've seen some ebbs and flows. Thanks again.
Ken Tharp, Iowa Equity Exchange
Looking good Ken- very nice job :) Must be nice to be able to get a copy of the Des Moines Register. As and Iowan I have to live with the Omaha World Herald. Its a good paper but just not IOWA like the Register is.
Hi Jason - My father-in-law was the news editor at the Register for many years. He retired years and years ago, but they immediately hired him as a copy editor. He continued working there until he passed away in November of 2006. He was 83, but he couldn't stop going downtown to work because he loved it so much. It was extremely clear that they loved him, too, even though he was "an eccentric old curmudgeon," to paraphrase some of the comments we heard at the funeral.
I think the Register, like a whole lot of papers, has gone downhill over the past decade or so. Without getting too political here... it's pretty clear where the editorial board stands, shall we say?
Ken Tharp, Iowa Equity Exchange