Local Housing Bubble Hasn't Burst

I read a great article that only reaffirms what I am seeing in the real estate market for Springfield Missouri. The article was written by Martin Crutsinger, The Associated Press, published in the Springfield Newsleader and states that nationally, home prices are dropping, but in Springfield they are still rising.

Martin Crutsinger
The Associated Press

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Washington — The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.
The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.



The Springfield housing market, however, continue to boast steady growth.

The local median home price increased by 2.6 percent to $123,950 in September, compared with $120,775 in September 2005, the Greater Springfield Board of Realtors said.

"The Springfield market is still very good," said Stacey Clem, president of the local Board of Realtors. "... The prices have stayed steady and gone up a little bit."

Unlike the national housing market, Springfield did not have "the big bubble to bust," Clem said, "and our properties have not seen the big appreciations."

Nationally, the price decline for new homes came while the sales pace picked up, rising by 5.3 percent to a seasonally adjusted annual rate 1.075 million homes. It marked the second consecutive increase in sales following three months of declines.

The declines in prices served to underscore the severity of the correction in the once-booming housing market, which had seen sales of both new and existing homes soar to record levels for five consecutive years, propelled by the lowest mortgage rates in more than four decades.

This year, with mortgage rates rising through midsummer, sales have cooled considerably, with housing expected to trim more than a percentage point from overall growth in the last half of the year.

At issue is whether the slowdown will be enough to push the country into an outright recession. The Federal Reserve, recognizing the weakness in housing, halted a two-year string of interest rate increases in August and left rates unchanged for a third straight meeting on Wednesday.

The Fed, however, gave no indication that it planned to start cutting rates because of the weakness in housing, saying it was still concerned that inflation remained too high.



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News-Leader reporter Didi Tang contributed to this story