Houston, we got a problem. The total number of homes sold year-to-date for 2007 is the lowest since 1998.
Here's what we've been hearing over the years: The best market happened in 2005. The year 2005 might be the best year as far as prices is concern, but not the number of homes sold.
click image to (+). data: NVAR
Looking back 10 years, we can see how the total number of homes sold between the period of 1998-2007 was actually peak in 2004 with 33,193 homes changed hands. Y-to-Y from 2004 to 2005 homes sold declined by 8% to 30,480 homes. The trend has been going downhill since then.
What's more, number homes sold this year were almost half from its peak in '04 to a low 16,843 in November. Between 2006 to end of November 2007, the total number of homes sold declined by a 'whopping' 32.8% from 22,377 to 16,843 homes, while prices remain flat.
This year monthly trends indicated that we do have a big problem at home. The number of homes sold in most of the jurisdiction in our backyard declined by steadily after the end of second quarter in June. [chart]
Entering winter season, the number of homes sold in Fairfax county declined from its peak of 1,423 in June (technically it's the end of Spring season) to 765 by the end of November. The same is true with other No.Va jurisdictions. In Alexandria, homes sold declined from 228 (June) to 127 (Nov). For Arlington, the total number of homes sold dip from 308 to 149 homes. Loudoun county also faced with the same problem. Homes sold there, declined from 466 to 285 homes.
click image to (+). data: NVAR
The challenges we have today, coming from different directions. The two big things are inventory and financing. Speaking of inventory. Look at how long will it take to sell all homes at different jurisdiction in Northern Virginia from its current level at the current market absorption rate, without adding new listings and new homes to the pipeline.
data: NVAR, GCAAR
- Washington DC: 7.3 months.
- Alexandria: 10.2 months.
- Arlington: 8.3 months.
- Fairfax: 9.3 months.
- Falls Church: 17 months.
- Loudoun: 11.9 months.
The absorption rates pointed to an overwhelmingly 'strong' buyers' market for Northern Virginia...and Washington DC.
To reduce market inventory, sellers would need to help buyers buy their properties. As simple as that. Whatever works. One of the solutions would be to come down in prices. This is probably a 'wishful thinking.' Because of new mix of products like foreclosed properties, bank-owned, short sale - that were scarce during the heyday of housing market have already started to blend in with the regulars.
The blending in of unusual products mix made the gap in prices vary widely. You have banks seeking to 'unload' their inventories pronto, like yesterday. Some of them already got burned with subprime. They need to move forward [read: sell now]. They are the type of sellers who are in the position to make deals happen. Sales of new homes hit the lowest in 12 years. That's why home builders have been offering all kinds of incentives along with cutting home prices aggressively to survive. They too, are also in the position to make deals happen. And then, we also have sellers who are still 'dreaming' wanted get their home sold with 2005 prices. The latter is the slow mo group of sellers.
Going in to 2008. So, what's this market has in store for you?
With the glut of inventory, this current market condition is 'very' good for buyers. Somehow these homes need to be sold one day. These are opportunities waiting for those who are ready, willing and able.
Just make sure that you get the money part straighten up first before out shopping. Because things won't happen without the money thing.. unless of course, you have cash.
Moving on. Have a prosperous and healthy new year.