This time of year is normally very slow for the real estate industry. This year may be different, and there are a number of reasons why that’s true, all related to the numbers game.
Inventory is down. From it’s high of almost 24,000 residential properties and 8,000 condos in 2006-2007, current inventory stands at about 14,000 residential and 4,500 condos. That’s a 42% decrease in residential properties and 44% decrease in condos!
Average Days on Market is down.  This is very neighborhood-specific, but overall market wide, the numbers are declining, down about 5 days in both the residential and condo markets.
Average price is down.  Normally, not a great sign, but closer inspection of these numbers is revealing. First, average price, month over month, has increased every month this year. That’s the first time that has happened in over 5 years, and a clear sign that things are getting better. We have examined specific price range sales, and determined that this is what is really driving the decline in prices in recent years. Sales of homes less than $150,000 accounted for about 24% of all sales in 1999. By 2003, when real estate sales were on fire, that number decreased to 8%. In 2008 (and through October 2009) that number is back up, in fact way up, to more than 27%. What does this mean? Basically, the sale of lower priced homes is very brisk, fueled by short sales, foreclosures and first-time buyers, many homes less than $150,000 are receiving multiple offers. At the same time, due to economic issues, sales of much higher priced homes has been, at best, flat. Sales of homes in excess of $500,000 is now less than 7.5% of total and declining year over year.
I believe that it is worth noting that a decline in average sales price does not have anything to do with the price of an individual home, but where the market is headed.
Bottom line: these numbers all indicate that we are in a balanced or normal market, no longer a buyers market. As we transition (as always happens) to a seller’s market, we will see volume increase, prices increase. Therefore, this normally slow season may be, for the first time in quite a while, very brisk.