Prices are stable, sales are seasonally normal, the market is balanced…it’s barely newsworthy. The only thing to talk about is the high inventory and the craziness we saw in the past two years. So, I’ve done some extra charts this week for some added interest.
From this chart you can see inventory usually peaks somewhere between May and August, so here’s hoping we see the peak in May 2008. From the new listings I’m seeing this week though I think we’ve still got a ways to go before we hit the peak:
As you can see sales are at or near normal seasonal levels, after June we should start to see them tail off:
The ratio of sales to new listings is one of the statistics we use to determine if it is a buyer’s market, seller’s market or balanced market, and for the second month in a row we just squeaked into the balanced market category:
The other stat we use to classify the market is the absorption rate, which is the number of months it will take to sell the existing inventory if sales remain stable. As you can see the absorption rate in 2007 was a wild ride, but this year it is hovering around the 6 month mark, which also indicates we are in a balanced market:
Last thing for today is the average days on market. Now, we don’t like to talk about this stat too much around here since it is unreliable. However, I had a look at the graph and noticed a definite annual trend that I thought was worth taking note of. As you can see the average number days on market tends to start out the year high, dip in the middle of the year and then increase again. So, forecasting out I think we will start to see homes taking longer to sell starting in June or July.
Enjoy!
Sara, does this graph of DOM reflect re-listed properties?
If a listing is expired after 90 days and then it gets sold after 10 days of re-listing and a price reduction, is it considered 100 DOM or 10 DOM?
Thanks.
Bunny – No it doesn’t reflect re-listed properties. That would count as 10 DOM. That’s why I don’t consider it a reliable stat, but I do think the trend is significant.
“That’s why I don’t consider it a reliable stat, but I do think the trend is significant.”
Sorry to point on this Sara, but this does seems as though you are contridicting yourself. If the stat isn’t reliable, then why use it at all?
I mean based on Bunnys’ example, all stats for days on the market are essentially mute and shouldn’t even be used as a means of measurement unless you can count the relist time(s) with the original 90 days on a given property.
Without being able to do this, the graph is meaningless as it displays inaccurate and scued data
I also want to state that this in itself is more of a recent occurance, and shouldn’t be completely discounted as it may come back into play again when the inventory drops back down to “normal” levels, but in our current state, it doesn’t mean anything unfortunately.
Sabb, look at the graph. you can’t tell me there is no trend there. Maybe the “53″ days should be more like 83 days, but the same problem with re-lists has always existed. You can’t disagree that homes take longer to sell at the beginning and end of the year than in the middle of the year.
Sara, unfortunately, I think sabb is right.
Prior to late 2007, that stat is very accurate, since very few listings are expired before being sold. The first glut of expiries occurred in November of 2007.
Ever since then, the stat became random noise without any meaning. The drop from January to February could possibly be that more listings pushed through the 90 day mark and got reset. But of course, we don’t know for certain.
From my own observations. I think about 1/2 of all sold listings are sold within 30 DOM. 1/3 of them are sold within 20 DOM plus expired 90 DOM, which is 110 DOM. 1/6 of them are from last year with about 400 DOM.
The average is about 118 according to my estimate.
No Bunny you are wrong. Terminating and re-listing properties has been a common practice for some time. Expired listings were also common until 06-07. If the two of you can’t see a trend on that chart maybe you should go see an optometrist.
***Comment deleted. Not relevant to topic. Personal Attack. See code of conduct.***
“If the two of you can’t see a trend on that chart maybe you should go see an optometrist.”
Wow is all I have to say to that.
I never stated I could not see a trend, or disagree that these types of trends happen, or that relists never happened in the past.
But hey what do I know right.
Why you guys are arguing with Sara about. Sara, thank you very much for working hard to get us this great data. Unfortunately, there are quite a few self-proclaimed experts who are essentially school drop-outs.
“…you should go see an optometrist”. That sounds like a personal attack to me. That rule must not pertain to the owners of this blog.
“…essentially school drop-outs.” theres another one. the rule must also not pertain to those that agree with the owners of this blog.
I’m greatly disappointed.
***Roger, when people pick and pick and pick it gets very frustrating. Especially when they make the same arguement over and over again with nothing to back it up. Even more so when I said right in the article that the stat is not reliable but the overall trend is worth noting. You have to also understand I don’t sit and monitor the blog 24×7 so sometimes it takes some time to edit comments.
Sara.
“Why you guys are arguing with Sara about.”
Thanks for the laugh mike, the school comment topped it.
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Get over it people and discuss like adults. This is not a WWF fan blog!
I have been watching the fate of 1519 single-family homes above 600K, since last Spring. My spreadsheet tracks when they appear on the market, when they “sell”, and when they get relisted.
When a house gets relisted, the clock starts with the original listing, even if it was off the market for a few months, in-between, as long as it does not look like it’s being sold by new owners who did a “flip”.
The 843 houses that appear to have sold, did so in about 82 days on average. There were 487 price reductions (some houses were reduced multiple times)
The 677 houses that have not sold yet have been on the market for about 142 days, on average, and there have been 778 price reductions, so far.
One house has been on the market for at least 281 days, was relisted several times, has seen 8 price changes, and now sits at 1.4% ABOVE the original list price of 850K. Go figure……
mdm
Just goes to show how many supposed or don’t really need to sell sellers there are out there right now. How many of the 677 houses do you think are just testing the market, ie. looking to see if anyone will pay what they are asking. That house that has been on for 281 days is definitely just testing the market.
The tell tale graphs have to be the “End of Month Inventory” and “Monthly Sales.” Even the bulls simply can’t fail to see that we are following the exact same market trends as the cities down in the US a couple years ago. Inventory is exploding, with minimum of 120% increase compared to any of the last 4 years. Sales have dropped significantly YOY and are now stagnant. Even compared to what the bulls would call “more normal years” of 2004 and 2005, at least the sales went UP noticeably in May back then and there were no inventory issues during those years. All the bulls have to hang on to is the price. The price is sticky going down, same thing happened in the States. It will all happen here in due time.
They ask the bears, “Where is the crash?” Instead they should be asking themselves “Where is the decoupling?” Moreover, “Where is the spring uptick?” “Where is the miracle that will make all the inventory disappear?” “Where are all the oil industry workers coming to buy it up?” “When will all the oil money be pumped into the population so more people can afford a home?” Somehow I wonder how much of that money the average Albertans will see. People like nurses, school teachers, policemen, fire fighters, garbage men, and many others. Yes, let’s all go out and get a ‘better job’ in the oil industry and let’s see how we cope without any of these people. Or does oil really has so much to do with real estate, and not the simple economic fundamentals of affordability and supply vs. demand?
Yes we are different, this is Alberta not the US, but we are different only in details. The collective mentality of the real estate industry, the banks, and the speculators have in Alberta now is no different than the mentality of those down south two years ago. When we think the same way, we act in similar fashion, and when we act in similar fashion, we get the same result. All the “differences” in what the bulls call “sound economic fundamentals” or “different lending practices” will only change the ‘when’ and ‘how’, it will not change the ‘if.’ People always think they are different, that’s why history repeats itself. Some people never learn.
This has to be making the bulls nervous watching all of it unfolding. And judging from the amount of taunts and insults thrown around by some of the more outspoken bulls in various blogs, they must be REALLY nervous. The writing’s on the wall; wake up and open your eyes.
Neil,
I agree. There seem to be a lot of people out there just testing the market. From looking at the type of houses that sit for a long time, and from the interior decorating shown in the photos, I draw the conclusion that many sellers are looking to cash in on their retirement nest egg.
Many of these houses were probably the cat’s meow in their day, but priced similar to some high-end new construction, they don’t seem to offer what buyers expect in that price range.
In other cases, you have to think that the sellers have squeezed every bit of equity out of the house and simply can’t lower their price. That’s when the vacations and the toys paid for out of a home equity line of credit come back to bite you….
Violet,
They will open their eyes when the brick hits them between their eyes. Good post.
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Regarding the “school drop-outs”, I am not sure which I dropped out.
I finished my MSc. degree in EE. A major part of my master’s thesis is on pattern analysis—trying to find useful information from a large set of data.
From a scientific point of view, the DOM raw data are too unreliable to form any kind of pattern. The pattern that Sara saw is just signal noise.