Thursday, August 23, 2007

August Market Statistics

Since 1996, I have been keeping track of the residential real estate market strength in Washtenaw County. On the chart, you'll see the latest update for August 2007, including two horizontal lines, for "Buyer's" and "Seller's" market levels.

Let me explain the data that makes up this chart. I keep track each month of the number of homes available - that is, those that are actively being marketed. I also keep track of the number of homes that have gone "under contract" - that is, where the sellers have accepted an offer, but it hasn't closed yet. The chart shows the percentage you get when you divide the number of homes "under contract" by the number of active plus "under contract" homes. What this tells us, really, is the pace of sales.

You can see, right off the bat, that there is some seasonality to the chart. The highs are typically hit in June or July, with the lows in January or February.

At this time, (August, the middle of the third quarter of the calendar year), the Washtenaw County market is in "Buyer's" market conditions. What this means is that there are more homes coming on the market than are being sold, so that buyers have the ability to choose. Buyers also have the negotiating leverage, especially on price.

This chart shows the underlying data from the first chart. The upper line (black) shows the number of homes available for sale on the market, the lower line (blue) shows the number of homes where the sellers have accepted an offer.

It is very clear from this chart what the root cause of our “buyer’s market” really is – it’s the number of homes available for sale. Since 2003, the number of homes for sale has steadily increased – in fact, it has more than doubled! The good news out of this chart is that the number of sales has remained relatively stable, although the sales are clearly cyclical based on the calendar.
So what does this all mean to you? If you’re looking to sell, realize that you have A LOT of competition in the marketplace. It takes a skilled marketer to make your home stand out among the crowd. If you’re looking to buy, well, you have so many more homes to choose from, and no pressure to “buy now” before someone else comes along!
I look forward to your comments regarding this post.

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