Home Sales Tank...what does that mean to you?

By Luke Mullins , On Monday January 25, 2010, 3:07 pm EST, US News and World Report

Existing home sales plunged in December, falling nearly 17 percent from November in their largest month-over-month drop since record-keeping began. Meanwhile, December's inventory represented a 7.2-month supply of unsold homes, notably higher than the 6.5-month supply recorded in November, the National Association of Realtors reported Monday...

"The collapse in sales simply reflects the bringing forward of transactions to beat the originally planned expiration of the first-time buyer tax credit," Ian Shepherdson, chief U.S. economist at High Frequency Economics, said in a report. Here's a look at what the December existing home sales report means for homeowners, home sellers, and home buyers:...


Said Patrick Newport, an economist with IHS Global Insight, in a report. "Going forward, prices are likely to fall from December's level because of rising foreclosures," ...
 
How much further will home prices fall? Mark Zandi, chief economist at Moody's Economy.com, argues that home prices have another 10 percent or so to fall before they hit bottom in the third quarter of 2010...
 
You never know 100 percent whether you are at the bottom in prices, but prices are very stable right now," said Zach Pandl, an economist at Nomura Securities. "Low prices, low mortgage rates, and stable price expectations are major positives and probably more important fundamentally than the first-time home buyers tax credit." But would-be home buyers should keep their eyes on mortgage rates, which are likely to head higher as the year progresses...
 
Although home sales should rise from December's depressed levels, those looking to sell property this spring will still have to have to work for it, said Guy Cecala, the publisher of Inside Mortgage Finance. "[Home sellers] should feel probably better than last year, but it was so bad last year that that's not a real fair comparison," Cecala said. "Anything is going to look better probably in the first half of this year than it did last year." That means home sellers will have to price their home aggressively, ensure the property is in tip-top condition, and be willing to entertain offers that aren't quite as strong as they would like. "I don't think anybody is going to be raising their prices," Cecala sad.
 
This seems to back up the advice that I have been giving to sellers/potential sellers lately: the window of opportunity is small, try to get on the market, under contract, and sold in the next 3-5 months!