This past week our listings saw an average of 2.6 showings each. Traffic has been surprisingly strong considering the season and I think it is a good sign of what’s to come in 2011. In fact, in the past three weeks we’ve put a number of our own listings under contract. Popular belief is that its very hard to sell right now and that’s true if you aren’t willing to accept that the market is down from the peak few years ago. But our marketing strategy is working and now we are running out of listings and are ready for more!
Back in November, I posted charts of historical data for Charlotte Real Estate in this blog. The data clearly showed that seasonally the market always bottoms out in February in terms of the number home sales based on almost six years worth of data. The worst month for home sales in the past six years was February 2009 when the home sales in Mecklenburg County totaled a gloomy 458. The scary part is that as of today the home sales for last month (November 2010) totaled 463 which is eerily close to the bottom of February 2009. What’s worse, if the trend continues that February is always the low point, then in two months we are going to see a new low. BUT FEAR NOT, because my prediction is that in 2011 we will break the trend! Here’s why:
1) 2011 was an anomaly as real estate sales this year were not based on pure market forces. The government sponsored tax credit from early this year abnormally skewed all the home sales data forcing more purchasing into the first half of the year. That left the second half of the year with lower than normal sales. I believe that there was pent up demand building during the last few slow months and it is just now starting to unleash.
2) Consumer confidence is beginning to rise, the financial markets have been holding steady and therefore mortgage interest rates have been slowly on the rise. The small but steady increase in interest rates is sure to get fence sitters to hop down and really think about pulling the trigger. Interest rate increases will affect affordability just as much if not more as a rise or fall in home prices. Those who do not act soon will probably be pinching themselves.
3) The most compelling reason why I think that February 2011 will not be a low point is based on pending home sales. Pending home sales are the homes under contract but not yet closed. They represent the sales that are likely to occur in 30-60 days since that’s about how long the closing process takes. In December 2008, the pending home sales were at 1010 in Mecklenburg County which was a low point for that indicator. Two months later, there were 458 home sales in February 2009. As of right now, 1357 homes under contract in Mecklenburg County which is 35% higher than the low point in December 2008. So unless a disproportionate number of those pendings don’t close, then it is unlikely that February’s sales will drop below 458.
To be clear, I don’t anticipate that 2011 is going to be a record year for real estate. But I think it will show some improvement over 2009 and 2010. There are still lots of foreclosures to be worked through and prices are still down. As sellers continue to recognize where the market is and understand that it might take the cutting of losses in order to move on, things will slowly improve.