December 16th, 2008 Categories: Market Updates
“When will we hit bottom?” We get that question a lot from home buyers and sellers in Montgomery County. I think a better question is “When will the local real estate market stabilize?”. There won’t be a specific date that marks this transformation, but we will observe a time period with increased home sales and a stablization of the inventory of available homes. Two observations tell me that we are seeing signs of a more stable market.
The first good sign is increasing sales activity for entry-level homes in our market. From my post in late November, we are seeing very brisk buying activity compared to last year. This segment of the market is dominated by distress sales and bank-owned properties. I expect that distress sales will still be prevalent here in 2009, but the substantial increase in purchases compared to 2007 is definitely an encouraging sign that we’re finding a floor.
The other statistic that shows promise is the number of contracts in Montgomery County for the 2nd half of this year. I like looking at the number of contracts because it is a very simple, easy-to-understand barometer of our market. An increase in the number of sales is a clear indication of an improving market. Compared to 2007, the total number of contracts from January to June in 2008 was down 25%. It seems like a long time ago, but the credit crisis really began in the fall of 2007. With sky-high gas prices and gloomy consumer sentiment, the 1st half of the year was a real downer. The 2nd half of the year, however, has shown improvement.
As prices look more attractive to buyers, and as interest rates continue to lower, I feel positive that we’ll continue to see improvements in our market during the first half of 2009.
What do you think? Are you starting to feel a little more bullish on our local real estate market? Or, are you still bearish? Make a comment and let us know your thoughts.