Hello,  

First let me apologize for being a bit late on our Real Estate Market Update this month. The good news is, I have very good reason to be late. There has been a lot of attention paid to the numbers released in mid-October and rather than just give you an information dump of the stats, I wanted to take the time to analyze the numbers with my team and make sure I gave you the appropriate details and opinion of what we’re seeing.

Most specifically, when the numbers were reported late last month, much of the media chose to take a top down view, focusing on the decline in sales and home prices. But, in most cases, what wasn’t factored into the equation was the over decline in inventory we are seeing market wide.

The fact is, inventory remains a major troubling spot for our market. Market wide, we are down to 4.2 months supply of inventory (that’s a 31% decline in inventory year over year) and yet sales, year over year market wide, saw a 16% increase. So while an initial look at the numbers may cause some concern, as you delve further into them, you really see some very positive trends coming from our market.

Market Commentary:

Again, this month, we saw some relatively big declines in sales month over month. The reasons for this are twofold:

1. Seasonality–We typically see a rather large decline in home sales between August and September. This year we saw a 6% decline in sales between August and September versus last year’s 4% decline.
2. Inventory–As I mentioned before, possibly the most important reason for this decline in sales is a decline in good, solid inventory. For the fifth straight month, we have seen a decline in inventory market wide. In fact, since April of this year, we have seen inventory levels drop by 12%. Year over year, the inventory levels have declined 21%.

Where are we seeing the biggest shifts in sales?

Overall, the big shift in sales have just been in the last month. In fact, year over year, across the board, we are seeing increases in sales across all markets with the entry-level market seeing the biggest rise at 23% year over year. The entry-level market seems to be receiving the biggest boost, thanks largely due to investors.

• Market Wide: 2,535 (Sept. 11) vs. 2,700 (Aug. 11) = 6% decline
• Market Wide: 2,535 (Sept. 11) vs. 2,186 (Sept. 10) = 16% increase
• Entry Level*: 1,822 (Sept. 11) vs. 1,915 (Aug. 10) = 5% decline
• Entry Level: 1,822 (Sept. 11) vs. 1,478 (Sept. 10) = 23% increase
• Mid Level*: 642 (Sept. 11) vs. 703 (Aug. 11) = 9% decline
• Mid Level: 642 (Sept. 11) vs.630 (Sept. 10) = 2% increase
• Upper End*: 100 (Sept. 11) vs. 109 (Aug. 11) = 8% decline
• Upper End: 100 (Sept. 11) vs. 99 (Sept. 10) = 1% increase

Let’s take a look at inventory numbers:

• Market Wide: 10,554 (Sept. 11) vs. 11,118 (Aug. 11) = 5% decline
• Market Wide: 10,554 (Sept. 11) vs. 13,440 (Sept. 10) = 21% decline
• Entry Level: 6,965 (Sept. 11) vs. 7,481 (Aug. 11) = 11% decline
• Entry Level: 6,965 (Sept. 11) vs. 8,705 (Sept. 10) = 23% decline
• Mid Level: 2,743 (Sept. 11) vs. 2,809 (Aug. 11) = 2% decline
• Mid Level: 2,743 (Sept. 11) vs.3,666 (Sept. 10) = 25% decline
• Upper End: 922 (Sept. 11) vs. 903 (Aug. 11) = 2% increase
• Upper End: 922 (Sept. 11) vs. 1,187 (Sept. 10) = 22% decline

Interestingly, inventory levels are the lowest they’ve been in more than two years.

As I visit our offices, one common thread I hear is, “I have so many great, qualified buyers, but it’s really hard finding them a good home.” Essentially what we have is a skewed view at supply and demand because the demand for a specific type of home is out there. It’s just unfortunate because the inventory for that particular type of home is dwindling. While the buyers are there, the good, solid inventory hasn’t been.

One major shift we have seen in the last month is a sudden decline in buyer interest in the luxury end. Whereas in my last two editions of Real Estate Market Update, we were seeing a solid luxury buying trend, suddenly, in September, we saw that interest decline, with sales dropping 8% and inventory levels rising 2% (month over month).

What is this doing to prices?

Buyers are far more active right now and that coupled with tight inventories is helping to firm up pricing while getting serious buyers to be a little more realistic when making offers–especially in the entry-level arena. Properties priced correctly and that show well are getting a tremendous amount of traffic as well as multiple offers.

Additionally, we are finally seeing many banks starting to process short sales in a more streamlined fashion, allowing us quicker short sale approvals.

Here is a look at sold median home prices.

• Market Wide: $180,000 (Sept. 11) vs. $185,000 (Aug. 11) = 3% decline
• Market Wide: $180,000 (Sept. 11) vs. $204,000 (Sept. 10) = 12% decline
• Entry Level: $146,000 (Sept. 11) vs. $150,000 (Aug. 11) = 3% decline
• Entry Level: $146,000 (Sept. 11) vs. $158,000 (Sept. 10) = 8% decline
• Mid Level: $312,000 (Sept. 11) vs. $323,000 (Aug. 11) = 3% decline
• Mid Level: $312,000 (Sept. 11) vs. $315,000 (Sept. 10) = 1% decline
• Upper End: $615,000 (Sept. 11) vs. $600,000 (Aug. 11) = 3% increase
• Upper End: $615,000 (Sept. 11) vs. $619,000 (Sept. 10) = 1% decline

The final piece I’d like to point out this month is that of accepted offers, which I think showcases several interesting trends (take particular note of what we have seen year over year both in the entry-level as well as in the upper end):

• Market Wide: 2,673 (Sept. 11) vs. 2,822 (Aug. 11) = 5% decline
• Market Wide: 2,673 (Sept. 11) vs. 2,124 (Sept. 10) = 26% increase
• Entry Level: 1,986 (Sept. 11) vs. 2,068 (Aug. 11) = 4% decline
• Entry Level: 1,986 (Sept. 11) vs. 1,430 (Sept. 10) = 39% increase
• Mid Level: 608 (Sept. 11) vs. 685 (Aug. 11) = 11% decline
• Mid Level: 608 (Sept. 11) vs. 588 (Sept. 10) = 3% increase
• Upper End: 95 (Sept. 11) vs. 102 (Aug. 11) = 7% decline
• Upper End: 95 (Sept. 11) vs. 136 (Sept. 10) = 30% decline

My final food for thought this month is that the market is making some interesting headway. While at first glance, it seems the numbers may be disappointing, when you further analyze them, they share a very different story.

We are seeing significant bright spots (and potentially trends) in the entry-level market while the interest in the upper end has had its fair share of challenges over the last several weeks.

We’ll continue to monitor these numbers over the next few weeks and look forward to sharing with you the October numbers in just a few weeks. I say this often times in my office meeting visits, but I think it’s a good way to end this month’s report:

When the market has changed, no one is going to run out in the middle of the street and yell, “The market has changed!” It’s only upon reflection that we can see that a real trend has been established. Until then, we’ll continue to regularly monitor these stats until we begin to see that strong, solid recovery.

That’s it for now. Make it a great month.

Sincerely, Kris

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
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