Perspective on Positive Housing Numbers

by Coldwell Banker Evergreen Olympic Realty, Inc. on September 21, 2009

Housing sales across the country are on the rise. Locally, Thurston County sales were up 12.2% in August 2009 over August 2008. That is surely good news, but sales are on the rise from very low numbers last year.

Sales in August 2008 were the lowest level that month had seen since 2000. So the big percentage uptick this August puts us back to August 2001 levels.

No one is saying that the increase in sales is not welcomed, but we are a long way from a “normal” year in sales.

Prior to the recent boom market, the number of sales grew by an average of 5.9% per year. Applying that rate of growth to our market from 2002 (the year before the boom started) onward, we’d expect to have 4,334 sales by year end. Instead, our market is on pace to have 2,544 sales. That seems like quite a big gap.

However, during the boom years, sales far exceeded the number historically seen. Since 2001, we have 32,053 sales. The numbers of sales we’d project for that time would have been just 31,356. (See Chart 1 below).

Click image to enlarge.

So even with a huge drop off in sales the last two years, our market is still pacing longer-term projections. What’s the old saying, biting off more than can be chewed? The numbers mean that our market is finally absorbing the excess sales bitten off during the peak.

What this means going forward is that we are returning to more sustainable times in our market. While it is too optimistic to think we’ll get back to our trend line for sales next year, nearly 4,600 sales, we should see more sales as demand is now becoming pent up.

However, demand will not be robust enough to overcome still overpriced properties. Prices, while off 12.8% from the peak, are still above our historic trend line (See Chart 2 below).

Click image to enlarge.

As we’ve reported before, expect average prices to continue to come down (see our September 10, 2009 post). As they do, we will see more buyers enter the market.

In fact, buyers are active today, jumping quickly on well priced homes. According to our latest market study, homes that did not require a price reduction before receiving an offer are going under contract in just 27 days. That is 18 days faster than the peak of our seller’s market.

Price is still the key to our market’s normalization. Read this interesting article for some additional perspective:

Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.

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