An Analysis of Real Estate Inventory: Why Now Seems Like A Great Time To Sell
For the years that followed the peak in 2006, buyers have since left the market causing a glut of inventory of homes. The few buyers that remained in the market found plentiful options and great bargains during the Buyer's Market of that time.
In 2012, the market shifted again toward a healthier, more balanced market. Today's buyer is still enjoying the benefits of historically-low interest rates and low housing values; but, have much fewer options than those buyers who purchased homes in 2011. Many real estate agents are noticing an increase in the number of bidding wars. Fewer inventory (i.e. competitors) may mean greater opportunities for you to sell your home during a market where demand seems to be keeping up with supply. Buyers are back!
My analysis includes four categories of inventory: (1) Active Listings (in Total), (2) New Listings, (3) Pending Listings (an indicator when offers were being written and accepted), and (4) Sold Listings.
ACTIVE LISTINGS (IN TOTAL)
Low: 3,328 Listings (January 2012)
Peaked: 4,471 Listings (July 2011)
Current: 3,511 (October 2012)
Inventory levels peaked during Q2 2011 and have generally declined since. We typically experience a cycle during the course of the year which indicates that the market slows during the winter months and peaks during the spring/summer months. For this reason, our lowest point occurred during January 2012 and bounced back up in February. However, over time, inventory has declined since July 2011.
NEW LISTINGS:
Low: 520 Listings Entered the Market (December 2011)
Peaked: 1,145 Listings Entered the Market (March 2011)
Current: 734 Listing Entered the Market (October 2012)
As noted with Active Listings, inventory levels (along with new entrants to the market) tend to decrease during the winter months and increase during the spring/summer months. New entrants to the market dipped during Q4 2011, increased sharply during Q1 2012, and has tapered off since.
PENDING (Month Which Inventory Accepted Offers)
Low: 165 Listings Accepted Offers (November 2010)
Peaked: 392 Listings Accepted Offers (April 2012)
Current: 196 Listings Accepted Offers (October 2012)
This analysis suggests that the presence of buyers increased in 2012 - peaking during Q2 2012 and tapering off since.
SOLD LISTINGS
Low: 264 Sales (January 2011)
Peaked: 749 Sales (June 2012)
Current: 552 Sales (October 2012)
During the 24-month period analyzed, the frequency of real estate sales increased to its peak during Q2 2012 and has slightly tapered off since.
OVERALL OBSERVATION
Within a calendar year, there appears to be a cycle - peaking during the Q2 and dipping during Q4. The peak season appears to begin early each year (February 2012) and continues through the summer/fall. Despite the cycle, it is important to note that buyers are still submitting offers (196 offers accepted during October 2012) and deals are still closing during the quieter months (552 closed deals during October 2012).
Demand - as reflected by Pending and Sales - peaked during Q2 2012 and has decreased slightly since.
Supply - as reflected by Active and New - peaked during the first half of 2011 and has decreased since.
Supply of homes peaked approximately one year before demand peaked. For this reason...
"In 2012, the market shifted again toward a healthier, more balanced market. Today's buyer is still enjoying the benefits of historically-low interest rates and low housing values; but, have much fewer options than those buyers who purchased homes in 2011. Many real estate agents are noticing an increase in the number of bidding wars. Fewer inventory (i.e. competitors) may mean greater opportunities for you to sell your home during a market where demand seems to be keeping up with supply. Buyers are back!"
Message for Home Owners Who Are On The Fence About Selling
This analysis seems to indicate that Buyers are back with limited number of options. It would seem likely that you will experience greater success in selling your home than those who attempted to sell their home since the peak of the housing market. If you are contemplating selling your home, then I suggest you beat the cycle and enter the market shortly after the new year begins.
Please leave a comment or send me an e-mail at dray@shorewest.com and let me know if you have any questions regarding my analysis or the real estate market in Metro Milwaukee.
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Labels: Economy, Finance, Real Estate
posted by David Ray @ 4:24 AM
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