From Hong Kong to Knoxville: A Reader's Analysis of the March Home Sales Report

Since both March and 1st Quarter stats are now up from the Knoxville Area Association of Realtors, I thought I would do something a little bit different for Homes Sales Report this month. Intrepid reader Mac O. in Hong Kong (yes, that's right I have someone reading this in Hong Kong) sent me his own great breakdown of the March numbers and I think it's worth sharing. Plus that means I only have to crunch the Q1 numbers. Heh.

Some of Mac's interesting observations:

- The number of homes sold in March vs. last year dropped 24.8% in unit terms.

- The amount of homes sold in March dropped 26.2%. This is continued bad news for real estate brokers, as they work on commission.

Yeah, tell me about it, Mac.

- The average selling price dropped 1.9% year-on-year. As input costs would appear to have increased, this means smaller margins for developers.

- The inventory of homes listed above $250,000 now stands at 25.4 months versus 17.4 months of inventory a year ago.

Perhaps most interesting is this observation on FHA loans:

FHA loans skyrocketed from 56 in 2007 to 121 in 2008. That is an increase of over 100%, with 11.5% of all homes financed via FHA loans in the past month. The question becomes whether tightening lending standards are preventing people from buying a home? Or is it that FHA rates are now substantively more attractive than Conventional loans on a historical basis?

I think the answer to that question might just be that FHA really is the new subprime. It's just about the only way to get anything like 100% financing and it's become the only option for people whose credit scores are lower than 620. I think we're going to see a lot more FHA loans as the year goes on.

Thanks to Mac - I look forward to seeing your April breakdown as well.

Coming next - Q1 Home Sales Report Breakdown