- The Washington Times - Monday, March 23, 2009

KANSAS CITY, MO. (AP) - Home sales in the Midwest fell again in February as doubts about the economy and tighter credit requirements stymied potential buyers, according to two reports released Monday.

Existing home sales in the 12-state region slid 18 percent from February last year, according to the National Association of Realtors. The median price in the Midwest declined 8 percent to $131,000 _ the second-smallest drop of any region.

By contrast, nationwide home sales slipped 10 percent from a year ago, without adjusting for seasonal factors, while prices tumbled almost 16 percent to $165,400.

Home sales fell in 11 of 12 major Midwestern cities with seven of those plummeting by more than 20 percent from prior-year levels, according to The Associated Press-Re/Max Monthly Housing Report, also released Monday. The survey includes all home sales recorded in the metropolitan statistical area by all local agents, regardless of company affiliation.

Chicago; Wichita, Kan.; Indianapolis; Des Moines, Iowa; and Kansas City, Mo., posted the biggest losses in the region, dropping by 25 percent or more.

The only Midwestern city seeing an annual increase in sales was Detroit, where deeply depressed home prices have brought in a truckload of investors and other bargain hunters. Overall sales increased 5 percent in February while the median sale price fell 50 percent _ the biggest drop in the country _ to $41,000.

Home sales in Chicago plummeted by 65 percent in February from a year ago, one of the worst showings in the nation, according to the AP-Re/Max report. The median home sale price has also fallen, declining 23 percent to $179,000.

Israel Fuentes, a real estate agent with Home Center in Chicago, said buyers who would normally have taken advantage of lower home prices are now staying out of the market, afraid that prices will continue to crater. He said the problem has only worsened as more homes go into foreclosure or are being sold short _ that is for less than the balance on the mortgage.

“I have never seen so many short sales,” Fuentes said. “Everything that is selling is mostly short sales. There are huge, huge, entire neighborhoods that have basically plummeted (in value).”

Those stressed sales make it virtually impossible for regular sellers to put their properties on the market for good prices, even in higher-valued neighborhoods, he said.

“Everywhere has been touched and affected,” he said. “Properties that I sold for $410,000 a year ago now go for $120,000.”

Sean Christie, an agent with Century 21 Realty Group in suburban Indianapolis, said the market isn’t quite as dire in his area. According to the AP-Re/Max report, sales in the Indianapolis market fell 29 percent in February while the median sale price fell 15 percent to $93,900.

Christie said he’s seen fewer buyers than normal and believes it’s partly because lenders have increased their requirements for mortgages, forcing potential buyers to provide more documentation on income and other financial factors.

“It used to be a couple years ago you could have hair on your head and be alive and get a mortgage,” he joked. “Now you need your grandmother’s toenails from 1932 and prove her DNA before they’ll give you any money.”

In Fargo, N.D., the problem has been less financial and more meteorological, said Kris Sheridan, an agent with Park Company. Blizzards struck frequently on weekends this winter, keeping home shoppers indoors.

Home sales in Fargo fell 25 percent in February compared with a year ago, according to the AP-Re/Max report. But the median sale price has remained relatively steady, declining only about 2 percent to $139,900.

Sheridan said there were few subprime mortgages in Fargo and foreclosures aren’t affecting home prices. Still, she said the economic woes affecting much of the country have scared away some potential buyers.

“I think there’s a lot of fear,” she said. “There’s not a lot of good news and that makes people become more conservative about their purchasing power.”

She said the market for first-time home buyers has been a bright spot, especially after the federal government began offering an $8,000 tax credit to first-time buyers as part of the new economic stimulus plan.

Rebecca Loney is one of those responding to the tax credit. Loney and her fiancee, Mickey Bahe, are in the process of buying their first home, a four-bedroom, two-bathroom split-level across the Red River in Moorhead, Minn.

“For us, (the credit) is going to go toward furniture and a washer and dryer and other things we don’t have,” Loney said. “It’s icing on the cake and makes us feel a little better about the extras that come along with it.”

Loney said she and Bahe, who plan to marry before they move in, negotiated the sales price on the house down almost $4,000 to $156,000 but were afraid to wait longer because they felt it was a great house in their price range and didn’t want to see it sold out from under them.

“We weren’t in a rush so we could have waited,” Loney said, “but I don’t think we’d have seen the price drop much further.”

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