That is the goal if you are a seller.
Yesterday, in the REALTOR® Magazine Daily Briefing there was a short report on the findings of a story in Baltimore. It seems that getting a house to sell fast in even a tough market (and Baltimore is a tough market) takes the same things it does at any other time.
As I state every month, the numbers for December are preliminary, and I expect them to change over the coming weeks. I would love to be able to delay a couple of days and have solid numbers, but the pattern I have seen in previous months tells me that the December numbers may change right up until the end of January. The November numbers actually changed between the 1st and 6th of January.
To be flat out honest, I am not thrilled with the December numbers… even as preliminary numbers. It isn’t as bad as it could be, but it is far from good.
Let’s start with the absorbtion rates. The twelve month number is down a little from last month, with it pointing to a 10.4 month inventory. The six month rate is actually up slightly, to 12.1 months of inventory. Finally, the three month rate is up to 15.7 months.
If you aren’t familiar with absorbtion rates, it is simply this: how long it would take to sell all of the current listings if no new listings were added. The common rule of thumb is that a neutral market has about a six month supply. A supply of less than six months points to a seller’s market, and a supply over six months points to a buyer’s market.
Let’s get down to some nuts and bolts…
Listings are down from October to November and from November to December (2164 > 1780 > 1451). However, the year over year numbers are up for both November and December, 6% and 9% respectively. As I have been stating for the last few months, I really want to see the number of new listings drop in relation to the previous year. The bright spot is that both the increases are below the annual average for 2007 (11%). Perhaps the deceleration will continue.
Pendings point to next month’s solds. They are a bit of a forward indicator. Pendings also can be a bellwether of financing problems and other issues with closing property sales. If the pendings are high, but the sales don’t pick up, that indicates that sales are falling through after contract. The most common reason would be financing issues preventing the sale from closing. In that case, either the properties aren’t appraising, or the loans aren’t getting funded. Currently, there is a “liquidity crunch”, meaning the experts are saying there just isn’t enough money to lend. Unless the December solds come up a lot, we may be seeing some of the effects of that liquidity crunch. Pendings are down from September through December (705 > 769 > 637 > 510).
Solds are where the action needs to be. Let me continue with the comparison to the Pendings above for a moment. The solds have been decelerating the last couple of months, but that is normal this time of year. The numbers for October through December (700 > 592 > 353). Looking at the September pendings (705), and the October solds (700), the pendings were actually a little lower than I expected. But, the following numbers October pendings (769) and November solds (592), I was expecting a little more sold activity. I expect to see a correction of the December solds activity as well. November and December were both off of the previous years by about the same amount (32% for Nov. and 33% for Dec.). But, I think that December will change a bit by the time the next report is published.
Since the last report, the November average sale price had a radical change. I previously showed it as about $238k, but it dropped to $225,100. Instead of a 2.3% increase, it changed to a 3.5% decrease. Currently, December is showing an average price of $253,449, up 7.1% from last year. Don’t expect that to hold up. I’ve been looking for a drop to spur sales. I think that we are starting to see that drop.
The final number that I’m going to kick out is the solds/new listings percentage. In the best markets, this is around 60%. Right now, we are looking at about 33% for November, and 24% for December. Basically, this is the percentage of sold listings vs. new listings. This highlights the importance of pricing a home properly. In November, for every three homes that came on the market, only one sold.
I have been calling for a spring recovery. I will have to stick with it for a couple more months. It will probably be the late spring, though… I expect May to be the month, but I won’t have final numbers until July. As always, when the market turns, the first movers get the best deal.
Look for my next report around this time in February.
Of course there is one little hitch… You have to be from outside the United States.
I just ran some numbers, and the US Dollar is at it’s lowest level in at least the last five years against both the Euro and the Pound.
For the Euro:
For the Pound:
Let’s put this into some real numbers. We’ll assume that you were thinking of a home here in Atlanta to stay in while traveling for business or pleasure. We’ll showcase a $300,000 home (in 2003):
The current value of the home (using averages) would be about $348,654… a gain of 16% over 5 years. But:
However, there are two things to keep in mind. the Atlanta market is different from some of the more popular markets with international buyers. It hasn’t had the dramatic price appreciation of Los Angeles (73% increase), Miami (70%), Las Vegas (71%) or New York City (40%) during the same period.
Atlanta is also one of the best connected cities in the world, with Hartsfield-Jackson International Airport (code ATL) having connections just about everywhere in the world. In fact, ATL is one of the busiest airports in the world.
Finally, Atlanta has an incredible list of international businesses that conduct major operations here. Aside from Delta, Coca-Cola and Home Depot; companies like UPS, Newell-Rubbermaid, FedEx, Siemens AG and Philips have major operations here. Atlanta is a logistical and transportation hub for the eastern United States. Another side benefit, it locating an office here, is that lease rates for office and warehouse space are both more plentiful, and cheaper than other eastern cities like Boston and New York City.
The case for the value of future investment.
Atlanta didn’t have the big run up in property values other major US cities experienced. While jobs and population here DID grow… often at rates higher than cites with higher property appreciation, the geographic boundaries (or lack of impediments to growth) allowed housing to keep up and keep prices reasonable. The benefit now is that while many other major US cities are poised to have property values decline, Atlanta should be able to maintain a more stable value going forward.
So, if the exchange rates of the US Dollar v. the Pound and/or the Euro return to historical norms, while the US Dollar value of the real estate remains stable or grows even slightly, the gains may be pretty substantial. Returning to the 2003 exchange rate, without a increase in the US Dollar value of the property would yield:
Imagine if the real estate market continues to chug along at even a modest increase…
Sources for this post include Forbes Magazine, Yahoo, Yahoo, S&P/Case-Shiller indices for statistics and background information.
If you are interested in other US cities, I call offer referrals to agents anywhere in the US. I have access to an incredible database of high performance agents.
I look forward to helping you with your property needs in the US.
Part of my daily reading ritual includes Seth Godin’s blog. He is often described as a marketing genius. I think that well might be true. But, his blog isn’t just about marketing, but also often touches on greater issues. This one certainly did. Although, he actually wrote it four years ago… still rings true. Did you go read it? I’ll wait… … … … .. .
I ran across a post on Active Rain that pointed me to an outside article that talks about the need for at least a 20% reduction in home prices in order for families to be able to afford to buy. Well, I love it when there are specific claims and statistics. I can usually verify and refute or support specifics. When someone tosses out some general and off the cuff stats, they can’t be verified.
So, I ran into one problem,