Last week I wrote about the fundamental data sequence that needs to occur in order for the market to shift back to a sellers market. To recap: First the number of sales increases, then the supply of housing falls, then prices can begin to go back up.
Well, home sales are rising and supply is falling. Below is a graph of the quarterly housing supply in Mecklenburg County over the past 5 years:
Note that the last time inventory was as low as it is right now was back in March 2008. Remember that when inventory is at a six months supply the market is considered to be in balance. When it is below six months, then you have a sellers market. When it exceeds six months, it is a buyers market. We are clearly still experiencing a buyers market, but the trend is surely heading in the direction of balance. When that happens, we can expect to see prices begin to rise shortly thereafter.
Remember when the market was hot and no one thought the market would crash the way it did. Everyone one thought prices would continue to rise forever and the general media never warned us about what could be coming. Now the tables have turned and all we hear is that prices will continue to fall and will never go back to where they were. Funny how quickly we forget.
I prefer to focus on the data, the stats, and the trends. From where I sit, all I can see is recovery; 2011 started out scary to put it lightly but as the year progressed, sales picked up momentum and have only mildly dropped off due to seasonality this holiday season. Personally, I haven’t been this busy this time of year since 2006. I’m encouraged and extremely fired up for a better market in 2012. So for now, I’m thanking my lucky starts, preparing to enjoy some time with family over the holidays, and pumped to start off the new year with a bang.
Happy holidays to all of you, my valued clients, friends, family and fans. See you in 2012.