Update 5/9/09: Looks like I've got some investigating to do - the final MRIS numbers are published (updated graphs now available at my website here - click on the "Market Stats" in the left sidebar) and they aren't even close to the "live" data I ran on the last day of the month. Not sure what's going on -- seriously, how can hundreds of listings be not there on the last day of the month but then appear retroactively 9 days later? I'll look into it and post results here when I get them. The short story is that inventory didn't drop in most cases--just a tiny increase of about 2% over last month for NoVA, for example. Still surprising but not nearly the big story the initial data hinted at. Contracts are up about 12% over last month, so the buyers are definitely biting! Obviously with an increase in contracts disproportional to the slight increase in inventory, it still indicates a shift in the market, just perhaps not that dramatic a shift as originally indicated.
In the meantime, here are some excellent charts detailing real estate inventory levels that illustrate my points and appear to be using the "live" data just as I had.
This. Is. Big. News. Typically in the Spring (from February through June) we see run ups in inventory as sellers prepare their homes for market. The final numbers aren't out just yet, but I think both buyers and sellers are going to be shocked by April's real estate statistics.
Let's take a look at the Arlington numbers I ran from today's MRIS (the consortium that owns our area's multiple listing service.) The spring run up looks like this for January through April: 875 - 925 - 986 --------and 793 for April! What?! That is the lowest number of homes available since February 2007. A 21% DROP in inventory in Arlington?! During SPRING?
And Northern Virginia as a whole: 7545 - 7811 - 8069 ------ and 5435!
A WHOPPING 33% DROP and the lowest number of homes for sale in NoVA since August 2005! Remember August 2005? When buyers were running around bidding things up like crazy because there weren't enough homes to go around?
What's going on?? First, buyers are getting it! Low prices, the lowest interest rates in 50 years, and the $8000 first time buyer tax credit have them out in droves. Just in the past week I had 3 of 4 buyers who submitted offers get outbid on properties in various locations.
To add insult to inventory, potential sellers are waiting to put their homes on the market because they don't want to have to take low offers. Much of the inventory, especially in the suburbs, is "distressed" (foreclosures and short sales) and many are in such poor condition that they will not sell for a very, very long time. So the level of "good" inventory (that is, will realistically sell within the next few months) is even lower than the numbers show. Homeowners who are on the fence about selling don't want to be lumped in with distressed comps, so aren't putting their homes on the market.
Finally, the 'moratorium' on foreclosures in the first quarter contributed to a lack of new distressed inventory coming on the market. But if there's another wave coming, it's not in the pipeline yet: a review of "preforeclosure" filings in Arlington listed just 73 properties, and Fairfax County showed 1000 (a big number, no doubt, but not enough to make up for the 2500 drop in inventory from March to April.)
What are the implications of this?
Buyers: Unless there's a big wave in May, you're going to have a lot less to choose from, especially if you want something that is 'move in ready.' Less inventory means more competition for the 'good' listings -- expect to pay closer to list price for those, and be ready to move quickly when you see one you like. Chances other other people are circling it too. Hope for a big bump in the coming weeks - otherwise it may be a tough road if you're trying to buy before November 30 to take advantage of the tax credit. Typically inventory peaks in June, with another much smaller bump in Sept/Oct.
Get started with your search:
Sign up to attend a free first time home buyer class or search the MLS
Sellers: If you are on the fence about selling, go ahead and get it on the market asap, especially if your home is a good option for a first time buyer. Make sure you put your best foot forward with some sprucing up, staging, multiple photos taken by a professional, a home warranty, and an extensive web presence as part of a comprehensive marketing plan. And it still needs to be priced right, of course. If you're wondering what the comps are for your neighborhood, contact me or visit my sellers resource center.
Source for all data: MRIS as of 5/1/2009. Data deemed accurate but not guaranteed