Market’s Picking Up… But How Much?
August 12, 2009If you follow the real estate market, you’ve probably heard that things have been picking up these last few months. Q1 2009 was ice cold. The market began to thaw in Q2, and here in Q3 we’re continuing to see a lot of action. Most of the churning is taking place below $1M, but there has been a higher incidence of luxury homes selling these past couple of months.
Is the blaze beginning to subside?
How much has the market picked up? We set out to find the answer using a very simple approach. We tallied up all the Single Family Home and Condo sales taking place per month dating back to June 2006. Here’s a look at the trend:
SFH vs Condo - Monthly Sales Volume Over Time (click to enlarge)
A few items to note in this chart:
- SFH = Blue Line, Condo = Green Line
- Winter troughs and summer peaks are clearly visible.
- The winter trough between late ’08 and early ’09 lasted a lonnnng time. No surprises there, considering the economy and collective consciousness of last fall.
- We’re not cheerleaders, but the numbers for July ’09 are the best since October ’06 when it comes to single family home sales volume.
- Condo sales are out of the gutter from the winter but still struggling compared to ’06-’08.
- For those thinking that short sales and REOs are the reason for the big recovery in single family home sales, note this: The median sales price for single family homes during the month of July 2009 was $785,000. A total of 49 sales were either REO or short sales, which equates to 20%. Sounds somewhat plausible to us, as 20% is quite significant. It would be nice to know the normal REO/short sale activity so we could see how 20% relates. Anyone know where to find this? MLS just started tracking this so we came up empty handed when researching past dates.
- Despite 20% of single family home transactions involving REOs and short sales, there is still a lot of bonafide activity out there.
Final Thoughts:
The market is indeed warming up. As a personal testament, you may have noticed we’ve been posting less. Not because we’re losing interest in blogging, but because we’re absolutely slammed right now. Buyers are more confident about getting into the market than they have been in recent memory. Matter of fact, we just got into the market ourselves (again).
Most know that a second wave could be coming, as unemployment and more foreclosures are indeed in the pipeline. However, it will be tricky (but not impossible) to measure as action on the low end is holding things up at present… action that will likely continue for the foreseeable future as long-term investors and those flush with cash take advantage. Bottom line? Buyers, always be in it for the long term. Sellers, prepare for a busy post-Labor Day rush before another winter trough.
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I generally agree with the above, but I fear a major inventory pile on in the coming months. May be hard to eat up that inventory. Sellers usually wait till fall since that is the buying season. Other than a few exceptions of buyers picking up prime properties, most activity seems to be value driven. I’m not sure there are droves of buyers waiting to jump on unless prices are realistic. It’s like retailers loading up on inventory for Black Friday but no one comes out to shop for the holiday season.
No Tuesday Tour update :(?
What happened to the listing that was pulled till Sept?!
Thanks for the commentary. I too am curious about this year’s Labor Day inventory spike. I think it will be larger than in years past. However, in the grand scheme of things, SF’s inventory is still very tight (save for a couple of new-development-friendly nabes) and I think demand is there and possibly increasing.
Unfortunately the Tuesday Tour was cut from my list of priorities this week. We’re juggling six escrows, have 3 closings this week, and are moving! I’m looking forward to getting settled into our new place so I can get back to my routine. The Downey St. listing was pulled because of vacation time for one of the parties involved. Hey, at least someone’s out on the beach sippin’ pina coladas in a hammock!
Thanks for the update. Glad business is rocking for you!
Thank you for sharing this information.
S.