What Do Home Sales Numbers Mean for 2010?

Posted on November 25, 2009. Filed under: Knoxville, National, Oak Ridge | Tags: , , , , , , , |


 

Home Sales Rising November 2009
Home Sales Rising November 2009

I imagine many of you saw this article in some newspaper somewhere yesterday. This one was in The Oakridger, November 24, 2009. I wanted to make sure you realize a few fine points about it. Here is another article about home sales http://www.bloomberg.com/apps/news?pid=20601087&sid=aEd91lkIePdg&pos=2

I love to be positive about things in life, and there is reason to be positive about the housing market right now. But…you need to know exactly why.

Notice the reason for the increase in sales in paragraph 7, “the housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market.”

It’s very important that sellers realize that their best chance to take advantage of this buying frenzy is to lower their prices to market level and SELL NOW. Your real estate agent can do an extensive market study for you to tell you exactly what that number is. And, your first few weeks on the market will let you know how to fine tune that number to take advantage of the current market. The steep price increases that we saw before this bust are not going to return any time in the next five years. The housing prices will probably not even begin a to steadily increase (will most probably decrease as much as 10 more %) until May 2010. But, if you need to sell it has been shown time and time again that if the house prices decline, the number of sales increase.

As far as my local market of Oak Ridge and Knoxville, Tennessee is concerned here are the numbers:

Oak Ridge: Here the sales have steadily gone up all year: July 24 sales, August 27 sales, September 29 sales, and October 30 sales. However, only about 10% of the houses are selling. The average sale price of a house has steadily been decreasing from $157,432 in July to $137,076 in October, with a spike of $178,411 in September. Those prices are for an average square foot house of 1800. The average days on market are about 90 days (for the ones that sell!!). The average asking price decreased from $161,558 to $144,513.

Knoxville Area: For the whole Knoxville area, which includes several counties around Knox County, the home sales did increase in October to 1023 over the previous month of 993. But, the sales are down 2% from July, the sales price is down 6% from July, the sales price is 34% lower than the average current asking price, and only 6.2% of the active listings are selling.

Source is the Knoxville Area Multlple Listing Service

What does this mean for buyers? You are not in as much danger of overpaying for a house right now. Houses are on sale. You can buy them for the lowest interest rate in a generation. Buy one for yourself and each of your children if you can. I predict the housing affordability will decrease starting around March 2010.

What does it mean for sellers? It is critical that you get the asking price down where the buyers are. Though the inventory of houses is huge, an eight months supply or more, your house does not have to sit there. Since other sellers are not budging, you have a chance to beat them to the buyers. In our area, sales prices are not drastically low, just lower.

The reasons both buyers and sellers should act now are that the interests are being kept artifically low right now, unemployment is high, foreclosures are continuing and predicted to increase, sale prices are predicted to decrease through May 2010 and then start up, but it will take a couple of years to significantly increase. I know, I should write a separate article to explain each of these predictions, and I will.

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