Low prices, the new magic potion
Cut prices and the buyers will come.
That appears to be one emerging lesson from the current housing downturn.
New home sales jumped 11 percent in June, for the third, month over month increase in a row, the Commerce Department reports.
But, you guessed it, prices fell even faster than sales rose, plunging another 12 percent, bringing the median price for a new home down to $206,000.
Clearly, falling prices are spurring an upsurge in sales, even as jobless rates continue to climb upward.
The Christian Science Monitor has an interesting take on the price issue in a feature on Cape Coral in Florida, which soared during the boom only to crash hard in the bust.
An epicenter for foreclosures, the Florida community is now starting to rebound as a mix of bargain hunters and investors scoop up homes at rock bottom prices.
The story offers a big picture view of this troubled housing market, while also telling the story of the $359,000 house that, foreclosed by the bank, is now on the market for $65,000.
Still, if falling prices are the key to reigniting sales, the still pricey Greater Boston market is clearly not following this prescription. At least yet.
If prices have dropped like a rock in many Sunbelt boom areas, they have fallen more slowly and steadily here.
And while there are signs that sales are starting to pick up, it’s also more measured.
It will be interesting to see how this plays out in the long-run, but we are clearly on a different trajectory right now.
