This past week our listings saw an average of less than one showing each. It seems we are experiencing the typical slowdown that comes at the end of the summer around Labor Day and right after the kids go back to school. If history is any predictor, we should see a slight rise in activity starting around now through the end of October before things slow down for the holidays.
Speaking of predictions, it seems that the media is full of negative ones regarding the fate of our economy. More and more we are hearing about the coming of another recession. Personally, I’ve grown a little tired of all the predictors. Where were they when the market fell apart in the first place? I’m certainly not qualified to refute the so called experts in terms of the global economy, but I am ready to make some predictions about Charlotte real estate.
I’ve been tracking real estate stats for about seven years now. One of the patterns that I’ve picked up on that seems to occur every year with seasonality is the relationship between pending sales, home sales, and home prices. First and most obvious is that pending home sales is a terrific indicator of home sales. Those homes under contract today are likely to close in 30 to 60 days. Second is that average home prices are very closely tied to home sales. The theory of supply and demand would certainly support that pattern.
Since 2005, I’ve noticed that for any given month in a calendar year, the low month for home sales is typically about half of the high month. Additionally, I have found that the low monthly average home price in a calendar year always follows the low month for number of sales. Respectively, the high month for average home prices always follows the high month for home sales.
Through the recent recession, the worst year for sales and prices was 2009. 2010 was only marginally better in terms of sales and prices, and some of that year’s numbers are skewed because of the first time buyer tax credits. So far in 2011, we are seeing sales numbers very much in line with 2010 except that the demand is more evenly spread out. (In 2010, demand was crammed into a few months during which the tax credits were in play.) The best news is that the average prices in 2011 during both the strongest and weakest months to date are better than the same months in the prior two years. This tells me that we are seeing a strong pattern of stabilization and even some degree of price appreciation.
The best news is that pending home sales are up well over where they were this time last year. Again, the pending home sales number tells us what is likely to close 30-60 days from now. So if pendings can predict home sales, and prices follow home sales, then it would make sense that we are in for continued improvement. Pendings are up from last year, and so sales should also be up 30-60 days from now.
Now of course if there should be some significant change in the global economy and things head south, the pendings will likely fall quickly and my prediction will be turned upside down. But for now, I’m staying positive that Charlotte real estate will hold steady in the coming months and into next year.