Friday, February 27, 2009

January housing sales take a vacation

Although we saw an increase in showing activity during January, it seemed many potential buyers were in a wait and see mode as the inventory absorption rate spiked upwards to 14.4 months and sales took a hard dip to their lowest January rate since 1996 with 912 total sales.
While some of the January figures are at least seasonable in nature, other factors that appeared to be in play included debate on the recovery bill (and the related homebuyer credit),

It would appear investors were an outsized portion of the market in January. Nationally, it was estimated that 45% of sales were "distressed" properties (i.e., lender owned or mediated). In the Cincinnati area this same trend was seen with an estimated 40% that were distressed sales. A point to note on this statistic: it is likely that the average price drops being reported are in large measure due the high volume of distress sales.
A couple of positives: base inventory and homes being leased. Even though the absorption rate increased above last year's number, the active inventory dropped from 15,050 in January '08 to 13,132 in 2009. Along with that, more homes are being leased and taken off the market. With builders continuing their decline in new homes built, these trends should help the overall market stabilize.

The overarching message is that if you are going to sell in this market, then you must be realistic about expectations (and unless you have to sell - don't). Condition is the key factor to selling your home quickly unless it is "bargain priced."

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