Front Lines

We saw some appreciation in the single family sector for the first time in years this spring. The townhome sector continued it's steady 19 month trend of increased sales and diminished inventory levels. The spring was very good for both sectors but that changed in May for the townhomes as we saw the number of sales com in at 53, a drop of 57% from April's high of 123. I attribute this to the fact that any buyer in the market pushed to get a contract in place by the end of April so that they could cash in on the Feds stimulus plan. April took May and June's buyer's. It is a bit disturbing in that August's number only increased to 66 sales compared to August '09's 78 sales. The more disturbing trend is that the townhome inventory levels have increased slowly but steadily for the last 3 months. Prior to that they have steadily decreased for the previous 23 months! In August '09 we had only 49 available compared to 213 in August of '08 but that has increased to 86 in August of 2010, an increase of 44%! Our absorption rate is now over 30 days for townhomes and approaching the 60 day mark. Not a good trend. This is bound to influence the single family home sales, as it will once again be a challenge for a move up buyer. With increased inventory and fewer buyers the "have to sells" (foreclosures being a big one) will compete solely on price and squeeze out the move ups who need the equity. We finally saw the positive impact of move up buyers this spring in the single family home sector. Once the townhome inventory level got down to where an owner occupied seller could compete in the marketplace. There was enough demand that the pricing increased and vacant foreclosures were gobbled up leaving the owner occupied homes as virtually the only choice. These people sold and moved up to a larger home in the same school district increasing the single family home sale numbers. We also saw a little bump in single family home pricing!! Inventory levels declined and we saw more sales in every month than in the same month last year. Since May though we have seen inventory levels increase and that does not bode well for the future. As of August we have 68 single family homes on the market, a 32% increase over the 46 available in August of '09. The good news is that single family sales this August were up by 20%over August of '09, with 30 compared to 25. the number of foreclosures has increased correspondingly in virtually every category but our inventory is not increasing due to a higher number of foreclosures so do not worry about that. Our inventory has increased because the slight bump in pricing has allowed some sellers to finally be able to enter the market. The problem is that as we hit the historically slower "post school starting" market of the fall increased inventory means that those seller that absolutely "have to sell" will only be able to compete on price and we will more than likely give back some of the gains we saw this spring. All told though it has not been a bad year for real estate so far although filled with challenges. As the year continues to unfold we will, as usual keep you informed.