Crystal Coast Real Estate: Is The Worst Over? (days on market, for sale)

[Bill Hitchcock]

Is The Worst Over?
Indications show the Crystal Coast Real Estate market has turned the corner
By: Bill Hitchcock

The Crystal Coast has some very “promising” indications that the real estate market has just turned the corner. The past 30 days have shown signs of improvement not seen in a long time. And with fingers crossed, we could be looking at the end of one of the worst real estate sales periods ever.

The problem has been the amount and rate of new inventory coming on the market. New listings have outpaced sold properties at a rate of 5 to 1, or more. This has been a problem for the past couple of years and has created a tremendous glut of inventory.

2005 saw prices sky rocketing to historic high levels along the Crystal Coast. The average sold price of a residential property back then was $298K. The high prices are what instigated the great rush to list. But as sales fell off, home prices never corrected accordingly.

The first signs of improvement occurred last April when the percent overage of active listings fell beneath double digits. The good news is that current level of inventory on the market for sale is dead even with last year. But the great news is the amount of new inventory coming on market has fallen by 29%. Sales, which have been off by 17% for the year, have improved up to 10% off when you compare the last 30 days with the same time period last year.

Getting list prices in-line with the market place has been a key factor for the improvement. The year to date average sold prices for a residential property are 5% less than 2007. The past 30 day sold prices are 5% less than this 2008 average and 17.5% less than the benchmark year of 2005.

The rate of sales will increase as the over-all inventory is reduced. Buyers tend to drag their feet when inventory is high and sales are low. To support this let’s look at a few facts. We have had historic high levels of inventory on the market for sale. Actual number of properties sold are at historic lows. The average days on market for an unsold property is a whopping 230 days. So much for a 6 month listing!

I would pay close attention to the absorption rate. The absorption rate, sometimes referred to as the supply of inventory, is an indication of how long it will take to sell off all of the inventory. The over-all supply of inventory on the market along the Crystal Coast is the same as last year, around 17-18 months. But if the next 30 days show similar results as the past 30 days then my confidence level is high that we’ll see that number drop. Pretty good seeing as how it was at 21 month supply a short while ago. The target is a 6 month supply, which is considered a normal, stable market.

During this same time in 2005 the absorption rate was at a 4-5 month supply.

We are moving into the beginning of early fall. It is traditionally a good real estate sales period. This year will end well if we can continue the path we are on.