November real estate sales
The November sales numbers are now available and they aren't pretty. It makes 2 consecutive months with big drops in unit sales and greatly increasing inventory. I'll post the charts first and make some comments after.
Month 2005 Monthly Sales 2006 Monthly Sales Change Yr/Yr
January 1031 1161 +12.6%
February 1093 1148 +5.0%
March 1739 1602 -7.8%
April 1514 1422 -6.1%
May 1674 1641 -1.9%
June 1854 1697 -8.5%
July 1544 1407 -8.9%
August 1687 1382 -18.0%
September 1519 1396 -8.1%
October 1389 1071 -22.9%
November 1405 907 -35.4%
December 1573
The first thing you are sure to notice is the large drop in the number of sales in the past 2 months.
Month 2005 Inventory (Months) 2006 Inventory (Months) Change Yr/Yr
January 4224 4.10 5199 4.48 +23.1%
February 4232 3.87 5906 5.14 +39.6%
March 4211 2.42 6271 3.91 +48.9%
April 4173 2.76 6600 4.64 +58.2%
May 4111 2.46 6908 4.21 +68.0%
June 3988 2.15 7302 4.30 +83.1%
July 4282 2.77 7736 5.50 +80.7%
August 4346 2.58 7884 5.70 +81.4%
September 4505 2.97 7997 5.73 +77.5%
October 4745 3.42 8252 7.70 +73.9%
November 5015 3.57 8484 9.35 +69.2%
December 5167 3.28
Here, you can see inventory growing again with the number of unsold homes at a 9.35 month supply, this number has been unusually high the past 2 months because of the large drop in the number of sales. Inventory months is calculated by dividing the available inventory by the number of sales.
Total Sales Jan-Nov 05 $4,580,369,669 Total Sales Jan-Nov 06 $4,402,696,825
Units Sold Jan-Nov 05 16,449 Units Sold Jan-Nov 06 14,834 -9.80%
Average Sales Price $278,459 Average Sales Price $296,798 +6.59%
For a little better news, pricing remains strong with the average sales price up for the year by 6.59% and while the number of sales have been declining, they are still down by only 9.8% for the year.
In my opinion, for inventory to come down, one of two things has to happen, either prices will decline somewhat or a large number of new buyers will have to write offers to purchase homes. I know several people who would like to purchase but they can't sell their current home, (generally from the Northeast). While I don't know the real estate market from around the country as well as the Charleston real estate market, the same laws of supply and demand rule, if there is a lot of inventory to choose from, it is a buyer's market, not a seller's market. Sellers have to take into account the competition they face when selling their homes and buyers have lots of choices. Priced right, homes are still selling.
I don't want to be the bearer of bad news for sellers who think their homes are worth substantially more than the market is telling you but if you are selling and no one is making an offer, your price is generally too high. I can tell you that in general, sellers in the Charleston market have been very unwilling to lower their prices from their high expectation levels and buyers just aren't buying them, therefore, inventory is growing and the number of sales is declining. I don't expect much change through the holidays but it will be interesting to see what happens in January. The most amazing thing is that interest rates are excellent, one of my preferred lenders is quoting 5.62% for a 30 year fixed so high mortgage rates are not stopping buyers from making offers.
All of this does not mean there is a bursting of the housing bubble or that I am predicting some kind of crash, business has actually been pretty decent (though it could always be a little better). 