Friday, January 29, 2010

December market is all over the map

Anyone looking at December's market statistics would be hard pressed to decipher whether it's good news or bad. Home builders are still having a tough slog, but existing homeowners can take some solace that pricing has appeared to stabilize.

Nationally, the numbers raised fears that the housing market will begin falling again when the tax credit expires. Several stats highlighted the concerns:
  • Pending home sales dropped 16% from November, but was up 15.5% on a year over year basis
  • Existing homes sales dropped 16.7% on a monthly basis, but up 15% on a yearly basis
  • New home sales fell 7.6% (with a 41% decline in the Midwest region)
  • The Case-Shiller price index was still showing a slight decline nationally, but the price curve shows prices flattening.
Cincinnati's numbers did show a somewhat more positive trend than the national numbers:
  • On a full year basis, the number of sales increased modestly over 2008. However, the average sales price was lower as first time buyers were an outsized portion of the market.
  • Average sales price increased from Dec. '08 to '09 from $141.6K to $152.8K. The number of sales year over year also increased from 1,271 to 1,306 for the month.
  • Overall inventory continued to fall. The absorption rate (ratio of sales to inventory) continued to remain below '07 and '08 at 8.9 months. There was probably a bit more increase from November to December (8.0 to 8.9) than we'd like to see, but was typical going into winter.
See charts for December based on the Cincinnati MLS.

No doubt it is and will be a buyer's market for some time yet. However, I do see some balance returning to the market. Buyers continue to ask for as much as 20 - 30% off list prices, but banks, builders, and even homeowners have begun to hold more firmly on pricing. For their part, banks have learned where to price houses to get them sold quickly and at full asking price (or more).

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