Tuesday, October 11, 2011

CAAR 2011 3rd Quarter Report: In a Word, "Down." Prices Down, Sales Down, Inventory Down.

This post: What do "Active Inventory" and "Days on Market" mean for buyers and sellers?
Next post: How much have prices fallen in particular areas?  How much will they continue to fall?
The Charlottesville Area Association of Realtors  Third Quarter 2011 Report is for the region. Data can vary widely from the City, and County to County.  This report is an overview.

First, the 2011 basics compared to 2010:
  • Prices for region are down -7.3%  
  • Sales for region are down -2.3%   
  • Inventory for region is down -7.6% 
  • Days on Market for region remains unchanged

**What if  lower inventory is NOT a positive sign?**

The CAAR report opens with active inventory (houses for sale) numbers
"Currently, there are 3,239 homes on the market, compared to 3,506...one year ago.  This continual float down of active inventory represents progress toward what is considered a balanced, neither buyer's nor seller's advantaged, market of 2,000 to 2,500 listings."
But the truth of the current market is harsh: the reasons there is less active inventory are not good news.  ID'ing correctly  the reasons for declining inventory will go a long way in correctly pricing a home: prices will continue to fall for quite some time here, and everywhere else.
  1. New listings are down due to the time of year.
  2. There are fewer listings because there are fewer "move up" buyers--folks are just staying put, knowing how hard it is to sell.
  3. There are fewer listings because of the area's rising foreclosure rate; folks are sliding into foreclosure before they even try to sell.
  4. There are fewer listings because many folks owe more than the house is worth; even if they can continue to pay the mortgage, they know they'd take a big loss if they tried to sell.
  5. There are fewer listings because sellers know how few buyers there are--there's a trend toward renting.
  6. The sad ever-increasing presence of the "accidental landlord" continues to be a phenom in this market.
That there was a 17+% increase in homes being purchased that were below $200k in 2011 v. 2010 it's investors and first-timers entering the market, not move-up buyers.

Further, the statement that there are "26% fewer listings in Q3 than Q2" is disingenuous: there are always more listings in Spring than the end of the summer.


Days on Market

Days on Market is a number that can be manipulated--and is.  A home can be on the market for 180 days--6 months--and relisted to start "fresh" at zero.  Redfin has shown that homes get the most interest the first 30 days they are on the market.  Buyers tend to think something is "wrong with" the listing or that the seller will be unreasonable about offers, the longer a home sits on the market.


DOM - Days On Market
And this:

Images copyright CAAR.

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