Improving market
A growing number of area real estate professionals are daring fate by starting to talk about an imminent market recovery. Yes, the months of pain for sellers may soon give way to a gradual improvement in market balance. Will the recovery be a run away boom? That's not very likely. But most seem to agree that by early next year, the recovery will begin to be noticeable if not quite in full swing.
Here are a few interesting signs that may point to an improving market:
1. From time to time, even in a buyers' market, you may notice prices rising. The statistics for June in Charleston indicated a reversal in price declines, even if just a short term reversal. I am not ready to suggest that this one month reversal will change the negative momentum, but it is a very good sign.
2. Another good sign is in the direction of inventory. If you study the inventory trends month to month in light of the inventory for the same month of last year, you will see something very interesting. With the exception of a slight uptick in May for single family homes, since January, the months on inventory (as a percentage of inventory levels for the same month last year) have been slowly trending downward. This trend is easily obscured if you look at just the raw totals but the trend is there. This trend is even more obvious when you look at the data on condos. The condo market seems to be moving in the direction of inventory equilibrium much faster that the single home market. It may be that sellers of condos have been more ready to accept price adjustments but I suspect it is probably that inventories are falling faster because more condo owners than owners of single family homes are turning to the strengthening rental market as an alternative to selling right now.
3. Looking as sales volume, the news is not as rosy - but there may be a glimmer of hope starting to show. Sales volume is continuing to decline across the region and is about 30% below this time last year. Important: the negative movement was rapid from January through May but there was little change from May to June. This could be the indication of a bottom, a slow stabilization or just a pause. It is a good sign.
4. According to the national Association of Realtors, home prices are expected to recover in 2008 with existing home sales picking up late in 2007 and new home sales rising early in 2008. New home builders will begin limiting new starts which will reduce the upper pressure on inventories. Existing home sales are expected to total 6.11 million this year and 6.37 million in 2008 (which is down from 6.48 million last year). Existing home prices will probably rise nationally in the range of 1.8% in 2008 following a 1.4% decline in 2007. The median new-home price should rise 2.2% next year following a 2.6% drop in 2007.
According to Lawrence Yun, senior economist for the national sensation of Realtors, “Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008."
Realtors like a market with a nice balance of buyers and sellers - where demand and supply are both reasonably strong. For real estate professionals, neither a buyers' market nor a sellers' market are as desirable for the long haul as balance in the market. We refer to a balanced market as a "healthy" market. It looks like we will be heading in this direction soon.
Buyers: If you are looking for the right time to buy, this time may be about as "right" as you will ever see.
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