How to know where we’re going

by | Jan 13, 2009 | How to Guides, Uncategorized

I talk a lot about inventory when I share info about the market. Inventory gives you a great snapshot of the market at any given point in time to know whether it favors sellers or buyers.

Right now what everyone wants to know is not where are we, but where are we going….

There are two ways to get an idea of Where We Are Going.

#1: If you look at the last 6 months of sales and a given area has 10 homes selling every month on average but you have 20 pending you know the inventory will be getting smaller. On the flip side if you have 5 pending you know the inventory will be going up.

#2: Pricing always follows Transaction Volume. To get an idea of where pricing is going to have to look at the trend in sold volume. If less and less homes are selling when you look at the last 12 months of information then you can bet the prices will continue to fall. The interesting thing is that there is a delay from when transaction volume changes and pricing changes so if you watch it close enough you should be able to read when a change is coming.

Where We Are:
1- Inventory in the metro area is up and transaction volume is down. Close-in inventory is low due to demand staying strong.
2- Transaction volume is trending down due to seasonal shifts we see each year but even with that in mind it is still down. I expect prices in outerlying areas to take a big hit in 2009 with the closer in areas weathering the storm much better.

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