This past week our listings saw an average of 1.7 showings each. Though the showing traffic remains relatively steady, contract activity continues to slow in the Charlotte area.
Recently, I compiled all the data from past E-Newsletters where I report monthly real estate statistics for Mecklenburg County. I’ve been reporting on that data since late 2004 and so I have five years of data to study. The past five years have been a wild ride in Charlotte considering that they include both boom and bust. In this blog post, I thought I’d share some data on the home sales and pending home sales trends over the past five year to see if there are any patterns to help us see a light at the end of a very challenging real estate market. Below is a graph showing both pending home sales and closed home sales month by month since 2005.
Besides the obvious pattern that pending home sales is a 30-60 day indicator of closed home sales, there are a few other interesting patterns. If you look at home sales over the course of the year, there is always a clear low point and a high point. The low point almost always occurs in February and the high point occurs in the summer. The first time buyer tax credit definitely had an impact on these values in both late 2009 when buyers thought the tax credit was expiring and again in mid 2010 when it actually did expire. But even considering the tax credit implications, the peak has always been summer and the valley is always late winter.
The most recent home sales data I have reported is for September 2010. The October data will be published in about two weeks. But in looking at the most current numbers for both indicators, we are very close to five year low levels. There are still three months to go until February which has been the low point the last five years in a row. Additionally, the pending home sales figures are currently trending downward although it is a very slow decline. So, if we are already at historically low levels in November, pending sales are trending downward, and we know that the low point each year usually happens in February, can we predict that home sales numbers are going to continue getting worse for the next few months? Isn’t that what typically happens during the holiday season? Could this mean that February 2011 will be historical low point for home sales over a six year period?
I have no doubt that the real estate market (which is cyclical) will recover and once again thrive. But for the time being, sellers are going to have to be very aggressive on pricing to compete for the shortage of buyers over the next few months. Prices are down and sales are down with record low interest rates. I smell opportunity for buyers. For with good credit and cash to spare, right now is when money is going to made. I truly believe that those who strike now or in the near future will be the winners years from now when all of this is over and behind us.