Market Stats so Scary they were Released on Friday the 13th

The local Vancouver Clark County Real Estate market report, as generated by RMLS, came out Friday the 13th of all days,and whether you are a Triskaidekaphobiac or not, these were some scary numbers.

While Months of Inventory (of houses for sale) was down January to February, it was up year-over-year/February. There’s enough real estate data points, ratios and percentages to give anybody wiggle room to spin this report. Really, with enough paint, you can paint this report any color you’d like… as for me, my favorite color has always been transparent.  I know lots of folks can simply throw out the numbers. And while that is the easiest way to get information into the public’s eye, I prefer to dig a little deeper and look at those same numbers from multiple, transparent, perspectives.

Most importantly, where will the Vancouver Clark County real estate market go from here? As a reminder, Months of Inventory (MOI) is defined by dividing the Active Listings at the end of that month by the Number of Closed Sales during that month [Active/Closed]. In my humble opinion, MOI is a key indicator of where we are at and where we are going.  Says something about supply and demand.  I guess that’s important economic mumbo-jumbo.

With MOI in the Vancouver Clark County real estate market standing at 18.6 months in February, it was a 11.4% decrease in MOI from January (yay!), sounds good right?  Sure, but February historically has a decrease in MOI from January.  Problem being that when you consider the average MOI decrease over the past two years from January to February was more than 17%, it doesn’t smell as pretty. Basically, while we decreased MOI January to February, we did it at a slower than historical rate.  In technical jargon, that’s called a bummer.  Still with me?

OK. So we get that the reduction in MOI was slower January to February this year than in the past, that’s just one number.  While I agree, lets continue digging.  Unless you’ve been living under a rock (whereby you’d have little concern about the time it takes to sell a house) you know that MOI has been increasing year over year for the past three years.  More importantly to me is the rate of increase.  For the last four months of 2008, the average year-over-year increase in MOI was 21.2% – that by itself is a BIG number.  Problem is that in January, that number grew to 23.5% and in February, it was 27.4% – Yikes!  While the Law of Large Numbers says it can’t go on this way forever, the year-over-year MOI number is still expanding. Not a good thing.

Back to my question… where do we need to go from here?  Please understand, I bought my crystal ball off of eBay, so I’m not saying its perfect.  But here’s what I’d look for in the March report.  I’d like to see the MOI for Vancouver Clark County in the 14.6-14.9 range (or less, of course!).  One, that would gain some positive traction for decreasing the historical February to March MOI reductions; and two, that would reverse the trend of expanding year-over-year percentage increases back below the number from the past three months. Now really, while I’d like to see that number at about 7.5, I’d simply take movement in the right direction for  now.

I know, them there’s a lot of numbers. And while I may come across as the boogie-man on a scary Friday, I really do think we are searching for a bottom. I talked before about not buying the rah-rah hype.  But, I believe we are finally closer to the bottom than we are the top. The last three offers I’ve written for clients all had multiple offers on the house. Pricing numbers are well on their way to returning to the historical trendline. We’ll likely continue to have an influx of short-sale and repo/REO inventory that will keep a lid on an explosive bounce from the bottom, but if trading stocks for six years in a previous life taught me anything, I know that no one rings a bell when it’s time to buy.

So while it may be scary out there, it’s always darkest before the dawn.

Vancouver Real Estate: Where Priced Right Really is Half Sold

If you’re going to have go there eventually, why put off the inevitable?

I’m talking, specifically, about those two words sellers fear and buyers expect “Price Reduced”.

It doesn’t HAVE to be that way though.  I’ve recently had the chance to dig deep into some data.  I did a dissection of some Real Estate stats from the Vancouver, Clark County real estate market during September, 2008 that puts a huge exclamation point on the old adage “Priced right is half Sold!”

I took a detailed look at the sold Single Family Residential homes in September, 2008, specifically looking for correlation between Sales Price and Days on Market.  The results were nothing short of startling.

Of these sales transactions, 27.4% sold in less than 30 days,  I found this to be a surprisingly high number, based on the current state of the market.  Additionally, nearly one-third (32.7%) of the transactions took 100 or more days to sell, a number I thought would be higher.  But then I remembered: this data was based on the now-modified concept of “Current Days on Market” – which only defined market time based on the most recent active listing for that property (vs. Total or Cumulative Days on Market – which is, get this, based on the cumulative days on market…). Anyhow, I recently dissected this change and what it means to time on market.

More to the point, however, was the Pricing aspect of all this.  Get this:

Of the homes that sold in 30 days or less, the Sales Price was, on average, a miniscule 0.44% discount to the original asking Price… in other words, over 99.5 Cents on the Dollar to their asking price. Wow.

But, as always, there are folks who start out high, hoping for the best, before the reality of the market pulls the rug out from underneath them.  Of the folks who sold with a “Current” Days on Market time of over 120 days, their selling price was, on average, a whopping 14.61% drop from their original asking price.  And with an average current DOM for these folks of 193.3 days (yes, almost seven months)… well, I bet they wish they had just priced it right to start with.

Again, it seems a house – priced right – is half sold. Especially houses for sale in today’s Vancouver and Clark County real estate market. Assuming you had already eliminated dart-throwing or pulling a number out of a hat as the best way to price a house for sale, for more in-depth analysis and a well-thought out selling strategy I know a guy who can figure out how to put two halves together and get a house sold.

Clark County Real Estate: “Days on Market” Doubles!

Well, not really, but the headline caught your attention, no?

Days on Market (how long it takes a home to sell in the Vancouver/Clark County market) jumped from 75 in September, 2007 to 146 in September, 2008, a 94.7% jump, at least according to the details in the way the Columbian reported the September number.  Yikes!

Now, as Paul Harvey used to say, the rest of the story.

Because of the recent challenges in the market, RMLS (the multiple listing service that includes Vancouver, Clark County and Southwest Washington) changed the way they calculated Days on Market (DOM).  The move seemed focused on changing seller’s “expectations” of how long it takes to sell.

The old way, a representation of the current listing DOM, was determined based on only the most recent real estate listing. Where the new “Total” Market Time, reflects the cumulative number of days on the market, including those from a previous real estate listing (so long as the house wasn’t off the market for more than 31 days in between).

Clear as Mud Pie?

Regardless of the complexity of the definitions and massaging of numbers, the new way is actually a much better reflection of the time it takes to sell a home.

Days on Market is a key factor in a listing, especially to buyers. Our free home search service on our site www.search360homes.com allows buyers to sort their search based on time on market, and in conjunction with our daily updates, is a great way to stay on top of the what’s new (or old, if you so desire) on the market.

For kicks, I searched our site and with a little sleuthing found that the “oldest” currently active home on the market has been for sale for 756 days, and counting.  Yes, Seven Hundred Fifty Six.  That’s a lot of time to make mud pies.