KANSAS CITY — Sales of existing homes in the Midwest fell 10 percent in April from a year ago as the uncertain economy kept all but first-time home buyers and steely investors on the sidelines.
The median sales price of an existing home in the 12-state region declined almost 12 percent to $138,800, the National Association of Realtors said Wednesday. The numbers show the twin effects of a customer pool dominated by low-cost buyers and distressed property sales that continue to drag down prices.
On a national, non-seasonally adjusted basis, existing home sales dropped 4.6 percent from April of last year, while the median sales price slid more than 15 percent to $170,200, the Realtors reported.
The Midwest didn't see the ballooning home prices during the real estate boom, but the region is being hammered by layoffs in the auto industry. Sales of previously occupied homes fell in 10 of 12 major Midwestern states tracked in The Associated Press-Re/Max Monthly Housing Report, also released Wednesday.
The survey includes all home sales recorded in the metropolitan statistical area by all local agents, regardless of company affiliation.
Median sale prices sagged in 11 of the 12 markets with only Fargo, N.D., busting the trend. There, the median price rose 1.4 percent to $140,500 while sales dropped about 26 percent, according to the AP-Re/Max report.
Wichita, Kan., experienced the biggest sales drop of the region, declining 26 percent, the AP-Re/Max report showed, although the median home price stayed virtually flat, declining just 2 percent to $120,000.
Tim Holt, a real estate agent with Realty Executives of Wichita, said he's seen an increase in calls from potential buyers, many attracted by an $8,000 federal tax credit for first-time buyers.
"That's going to have a trickle-down effect because people selling their homes to (first-time buyers) will be buying other homes," Holt said.
Dan Vick, a Kansas City real estate agent, said he believes the influence of first-time homebuyers will strengthen later this summer as renters begin getting out from their leases and will be ready to buy.
Home sales in Kansas City declined almost 22 percent in April from a year ago while the median sale price dipped 5 percent to $138,000.
"In my opinion, we probably bottomed out three months ago and didn't know it because we're cranking right along now and I see every month us getting stronger," said Vick with Re/Max of Kansas City.
He said financing continues to be a problem as stiffer loan requirements are tripping up otherwise sterling customers. For example, he pointed to a doctor who is moving into town to buy a successful practice.
"It used to be, you had a guy coming out of med school, you could get him a loan in a heartbeat," Vick said. "Today, because he doesn't have a two-year history of owning his own business, we've been having difficulty getting him financed."
In Des Moines, Iowa, home sales fell 25 percent last month and the median home price declined almost 13 percent to $150,630.
Susan Webster with Coldwell Banker Mid-America Group said the path toward recovery is going slower, but she's still fielding more calls from new buyers and investors who think the worst of the economic slowdown has passed.
She said, however, that some buyers are making low-ball offers on distressed properties with visions of a quick turnaround.
"I call it the HDTV syndrome," Webster said. "They watch (home improvement shows) and think it's a dance in the park and you're an idiot if you don't buy a fixer-upper, spray paint it, put in a new carpet and then make a quick $100,000. So you have these really unreasonable expectations."
Detroit and Minneapolis were the two gainers in the region for sales, increasing about 6 percent and 3 percent, respectively, in April, according to the AP-Re/Max report.
But those extra sales were fueled mostly by plunging prices. The median sales price in Minneapolis fell by almost one quarter to $154,449 last month, while the sales price in Detroit fell 52 percent to $42,000 — the largest drop in the nation.
John Marker, a real estate agent with Keller Williams in Detroit, said he doesn't think the market has hit bottom yet, especially with automaker Chrysler in bankruptcy and General Motors likely headed in the same direction.
"Once we do hit bottom we will ride along without much appreciation for awhile," Marker said. "It could be a few years before we see prices start to go back up. But a lot rides on what happens with our auto industry."