Market Update For Our Sellers

Karen & Todd send our sellers an update on market conditions every two weeks. Here is an excerpt of that e-mail.

Now more than ever, everyone is asking, “What’s going on with the market?” The answer is not as short as the question.

In summary, my answer is that values continue to dip in our market, and there are signs that homes may not depreciate as much in ’08 as they did in ’06 & ’07. Notice I said that homes should still depreciate, but not at the same rate. The number of listings on the market along with the number of sales is leveling off. However, this does not mean prices are leveling off.

The average Time Supply of Inventory in our market has been climbing since 1999. Time Supply of Inventory looks at the current supply of homes on the market and compares it with the current rate of sales. Ultimately, we want to know how long it would take to sell that inventory. At the end of ’99, we had an average of 4.6 months of inventory on the market. It’s no surprise that we saw somewhere around 10% appreciation that year. From ’01-’03 the average was 7.3-7.7. During this time we witnessed 1-4% appreciation. At the end of ’04, there was 8.7 months of supply. This is the point in which most Realtors believe homes started depreciating. Right now we have nearly 20 months of supply on the market. The graph below shows this data. So what does all this mean? I believe the Time Supply of Inventory will need to be around 8 months again before prices level off. We have a long way to go. If there is say, 11 or 12 months of supply on the market there will still be depreciation, just not as high as we are seeing currently. Instead of 10-20% depreciation we might only be seeing 3-5%. The point is the market needs a combination of fewer homes on the market and more sales to decrease the time supply of inventory. In the meantime, we are racing to sell your home before it depreciates more.

Now are we giving the same answer to the “How’s the market?” question to potential buyers? Absolutely NOT! We are telling them the truth on the buyer’s side:

* A high number of homes to choose from
* Low interest rates
* Low prices

These factors make this an ideal time to buy.

If in the near future:

* Interest rates climb at a higher rate than the rate of deprecation
* Inventory levels (choices of homes) drop

Then today might just be the best time to buy in history!