ONLY TIME WILL TELL…
While one sector took a hit this month, the overall market numbers look pretty strong. If the market is a car and the speed tells us how well the car is doing, we’d say the market is moving at about 55 mph – not too crazy but not too slow either. Let’s look at what each section tells us. . .
DEMAND:For the first time in 2013, the number of homes sold in November slipped below last years number. While this one number by itself doesn’t really concern us too much, it is a sign that the market has finally hit a bit of a wall. This was eventually going to happen as the numbers couldn’t keep outdoing themselves, given the year we’ve had. As we look at the other numbers, you’ll see why this number, by itself is not too much of a concern.
SUPPLY: The supply of homes still runs underneath last year, but it’s getting close. We expect levels in 2014 to mirror last years, with a slight potential to float just above. The thinking there is that we don’t expect the market to be as active as 2013 which would allow inventory to be just a bit elevated above this year. Inventory levels are important to follow as they tell you pretty quickly what “speed” the market is going. . . Is it just putting along or is it on the highway? Right now, we’d say its going about 55 mph – not too fast, but not really slow.
SOLD TO LIST PRICE RATIO: This number continues to show promise. Again this month it is around 95% which is a great indicator that seller’s are getting very close to asking price. We are still seeing some multiple offer situations and even if our clients offer is the only one on the table, they still have to pay close to asking price. This is going to help prices continue to float nicely upward heading into 2014.
INVENTORY ACCUM: In November, the months of inventory available sank below 6 months again to about 5.25 months. This indicates that the market is still slightly tipped towards the seller’s advantage, which is what we are seeing. Overall, if the levels stay around 6 & 7 months, it’s a healthy market.
CONCLUSION: When looking at the Chester County market from a 10,000 foot view, things continue to look good. The level of supply, the inventory accumulation and the Sold to List Price Ratio are all pointing to a positive, strong market. With interest rates in the low 4’s and overall home prices still relatively low, the market is also great for buyers. The big question is going to be the overall economy. There are rumors of some hits coming to the economy by way of “Obamacare” and it’s effect, as well over speculation in the stock market. The housing market is very much driven by how confident consumers are in their employment and the overall direction of the economy. If that confidence weakens, it will affect the housing market and prices. If they continue to see signs that they can remain confident, the current market will continue. Only time will tell.