Here we are, just over halfway done with the year. I like to take an in-depth look at the condition of the housing market at the mid-way point to keep my finger on the pulse of what’s going on and saw some good and some bad things. Good news first.
One thing that helps us to keep track of how fast homes are moving is the amount of inventory there is on the market. We answer the question: at the current rate of sales, how long would it take for all of the current homes on the market to sell? Generally below 3 months is a hot sellers’ market, 3-6 months is even, more than 6 months is considered a buyers’ market. Single family homes has been steadily improving. June of 2008 inventory was 12 months, dropping to just under 9 in 2009, to just over 8 in 2010 and now is 6.4 months. Half of what it was in 2008! In June of 2008 there were 9,373 single family homes on the market, now there are just 5,733. If you’re out looking for homes and it just feels like there’s not as much to choose from anymore, you’re right!
Condos have seen an even more dramatic improvement. In 2009 there was 27 months of inventory (over two years!!!) and today we are down to 9.5. This is a combination increased sales (from 300 to almost 550 year to date) and a significantly decreased number on the market (from almost 1,400 down to under 900). The reason for this I’m not sure. Lending for condos continues to be more challenging than for single family homes which has had an impact.
The other piece of good news is the number of homes sold. I’ve included a graph because I’m a visual person. The red line is 2010 and you can clearly see the effects of the tax credit as April saw a dramatic spike in sales followed by several months of lowered sales in the summertime months which are normally the higher sales months. 2011 has had a more usual sales cycle with the winter months being slightly lower than the summer months. The number of units has increased over what it was in 2009 and is on pace to exceed both 2009 and 2010.
The bad news is that although the number of homes sold has increased, the average price range that those sales are in has not. Until 2007 the most common price range for sales was $100,000-$150,000. 2008 had the most frequent price range be $50,000 to $100,000 and 2009 is fell below $50,000. In 2010 the number of first time home owners increased in response to the credit so the most frequent price range came back into the $50,000 to $100,000 range. It appears that investors have increased in 2011 homes under $50,000 has again become the typical sale. This obviously has an impact on the average sales price for the area.
Foreclosures and distress properties such as short sales continue to have an impact on our marketplace. This is a blog post unto itself, stay tuned!
So, although prices have not seen much recovery, there are some positive indicators indicating that the market is trying to recover. I don’t anticipate prices to come back until distress properties have become a lesser percentage of the market.
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