Overall home sales were down an average of 14% in 2008, over 2007, with numbers as high as a 27% decline in homes sold in the $800,000 - $900,000 range, and 20% down for homes selling between $900,000 and $1M. Declines such as we saw in activity in 2008 were generally due to “uncertainty”.

Northwood Hills experienced a 41% decline in home sale transactions for 2008 over 2007, with forty-one sales, as compared to seventy the year before. Average continual days on market (DOM) rose to 141, with an average selling price of $533,753 or $143.60/square foot.

With the drastic decline in home sales and the increase in DOM, it is surprising to see that prices have remained relatively constant. What can this be attributed to? The level of inventory in Northwood Hills actually shrunk over the same period, while cancellations and expired listings went up. There are currently thirty-seven active listings in our neighborhood. This means that motivated sellers stuck with the process, adjusting the price, until ready, able and willing buyers stepped up to the plate. Unmotivated sellers took themselves out of the game. And because inventory is lower and representative of all price ranges in Northwood Hills, the slowdown in transactions and DOM have not negatively impacted values.

What can we expect in 2009? I attended the Women’s Council of Realtors luncheon in January, where Hexter-Fair Title Company Chairman, David Fair presented his forecast for DFW real estate in 2009. According to David, a strong DFW economy will keep real estate values up. Strong job creation, corporate and individual relocations and the oil & gas industry, particularly the Barnett Shale, which created 83k jobs in 2007 and generated $8.2 billion into the local economy, kept our housing market from the declines much of the nation experienced. Citing the PMI U.S. Market Risk Index, Dallas-Fort Worth and suburbs were at lowest risk among Metropolitan Statistical Areas (MSAs) of experiencing housing price decline over the next two years.

Last year, the state of Texas actually saw job growth of 221,200, with DFW the recipient of 46,900 of those jobs. As “certainty” (from bailouts, interest rates, job security, inauguration, etc.) returns over the coming months, the DFW residential market is poised to rebound in the spring of 2009. Interest rates are at a forty year low for borrowers with excellent credit at approximately 4.5%, for a 30yr conforming loan, i.e. up to $417,000. The lower the interest rate, the more house the borrower can afford. This should keep average home prices strong.

Jumbo rates have been slower to react. The week of January 19, 2009, according to bankrate.com the spread between conforming money and jumbo (loans over $417,000) continued to be much larger than normal - 179 basis points. During the same week, the average conforming rate was 5.28%, while the average jumbo rate was 7.07%. This larger than normal spread is directly responsible for the slowdowns we saw in the high end home market in 2008 and continuing into 2009. As “certainty” returns, excellent credit risks, should begin to see smaller spreads in jumbo money, a stimulus for the high end market.