Home sales slide 8 pct. in Midwest in October

[November 25, 2008]  NEW YORK (AP) -- Existing home sales in the Midwest fell 9 percent in October compared with a year ago as consumers got increasingly nervous about the sinking economy and deteriorating fortunes of Detroit's automakers, the National Association of Realtors said Monday.

The median sale price in the region slid 6.7 percent to $149,400.

Nationally, by comparison, home sales fell less than 1 percent, without adjusting for seasonal factors. The U.S. median price, however, tumbled 11 percent to $183,300.

In the Midwest, home sales fell in 10 out of 12 major metro areas tracked in The Associated Press-Re/Max Monthly Housing Report, also released Monday. The two exceptions were Minneapolis and Detroit, which have both seen dramatic surges in foreclosures, big price declines and buyers taking advantage of deep discounts.

The report analyzed all home sales recorded by all real estate agents in the metro areas, regardless of company affiliation.

The median sales price fell compared with last year in nine cities in the AP-Re/Max report. Two smaller cities bucked that trend. In Wichita, Kan., prices rose 10 percent to a median of $127,000, while in Omaha, Neb., they were up 2 percent at $143,000. In Des Moines, Iowa, prices were flat.

"Everybody's afraid of losing their job," said Evelyn Krazer, sales manager with Johnson Realty of St. Louis. "People who are thinking about moving are holding off."

Krazer herself had been planning to move out of her lakefront condominium into a house that an investor is trying to sell, but hasn't been able to reach a deal.

"It's a battle of the wills right now," she said. "We'll see who wins. I have a feeling I will."

St. Louis saw the biggest sales drop in the U.S. in the AP-Re/Max report. Sales declined by 63 percent from last October. Prices dipped 9 percent to a median of $132,000.

The declining U.S. economy, which most economists say is in a recession, and the fate of troubled Detroit automakers likely will prolong the Midwest housing bust.

"We've still got this major hurdle in the auto industry to overcome," said Diane Swonk, chief economist at Mesirow Financial in Chicago.

Concerned about the sinking economy, buyers are even walking away from sales at attractive prices. Liz Sidorowicz, an agent in Chicago, said one of her recent deals -- a short sale in which the bank agrees to take less than the value of the mortgage -- fell apart even though the price of $180,000 was $40,000 lower than a recent sale in the same building.

Some buyers "wouldn't know a good deal if it struck them in the face" she said. "I don't know what they're waiting for."

October's median sales price in Chicago was down nearly 10 percent from a year ago at $218,000, while sales fell by nearly 19 percent.

Sales in Detroit, however, were up 21 percent, while prices fell 43 percent to a median of $62,500. Sales in Minneapolis were up 12 percent, while prices fell 18 percent to a median of $180,000.

Aaron Dickinson, a real estate agent in the Minneapolis area, recently analyzed the region's sales in a report for the Minneapolis Area Association of Realtors.

He found that nearly 35 percent of sales in the third quarter came from short sales and foreclosures. Prices on those properties fell about 9 percent from last year, compared with 4.6 percent for non-distressed sales.

"Really what we see," he said, "is a tale of two markets."

[Associated Press; By ALAN ZIBEL]

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