The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth
For an archive of The Real Story visit: http://www.DavidParrishRealtor.com/myblog
So how’s the market…
It’s a question that I am asked everyday: So, how’s the market? Simple question … complex answer! My normal (and very true) response is: That depends on where you live. With that response, there usually follows a discussion of many different topics that impact the answer to the question providing information useful to the asker of the question and their specific market concerns. While I will probably continue that modus operandi, I have made some general observations lately that may be useful.
Being a kind of numbers freak, I spent some time last weekend putting together a current analysis of the market with an eye to foreclosures and sales during the past six months. Guess there’s no accounting for what some of us count as fun! As always, I will issue the warning that averages and other numerical analysis represents some type of normalization of the studied and therefore doesn’t necessarily represent the most accurate answer for a particular situation or property.
Looking at the metro Birmingham market there were: 6,892 home sales during the last 6 months of 2009, of which 1,981 (28.7%) were foreclosures. Foreclosures averaged an actual sales price of 88% of the last list price, while non-foreclosures averaged just below 98% of the last list price. Active Inventory as of 01/31/2010: 12246 of which 1393 (11.2%) were foreclosures.
The absorption rate (average number of homes sold per month for the previous six months) currently stands at 1149 homes per month yielding an inventory or supply of homes of just under 11 months worth… clearly a Buyer’s Market.
| Period | Homes Sold | Foreclosures | % of Sales | Sales Price Average % OfFinal List Price |
| Sep 2009 | 1213 | 326 | 26.9 | 88.0% |
| Oct 2009 | 1182 | 368 | 31.1 | 87.6% |
| Nov 2009 | 1115 | 283 | 25.8 | 88.0% |
| Dec 2009 | 938 | 315 | 33.6 | 88.5% |
| Jan 2010 (Partial)* | 585 | 227 | 33.8 | 88.1% |
*Sales recorded as of 01/29/2009. Final sales not available at time of reporting
Note the difference between the percentage of homes on the market that are foreclosures and the percentage of homes that have sold that were foreclosures. That is while 11.2% of the homes for sale are foreclosures, the most recent numbers indicate that an increasing number of sales are foreclosures by a factor of 3 to 4 times the percentage of homes that are foreclosures indicating a very clear trend of bargain hunting buyers.
Note: Pending Sales on Jan 29th (that is homes which were under contract but which had not yet closed) stood at 1111 of which 489 are foreclosures or 44% of total sales (pending).
Most of these (foreclosure) sales were for non-owner occupied residences indicating investor purchases. This information fits with a national trend, which is the increase in investor activity in the market. Investor activity is up by 20% over 2008 activity, representing the largest market growth sector.
So what does this mean? Investors are seeing now as the time to get back into the market… a signal that we are at or near the bottom of the market.
Next week I will look at micro markets (neighborhoods)in the Eastern area of the metro Birmingham market.
