For about two years we’ve been telling people that we can’t call a bottom to this market until we see median prices level off, combined with a pickup in transactions. August home sales witnessed at 22% rise in transactions and a modest 1.91% rise in median sales price over the previous month.
One month doesn’t signal a bottom to the market; however it is a positive sign that we’re now seeing both indicators rising in one month. Both occurred during a time when we traditionally don’t see a rise in transactions, so seasonality cannot be blamed for this rise. If we continue to see a trend over the next few months, it will indeed be encouraging news for a beleaguered real estate market.
The media will most likely focus on sales levels Vs. the previous year, although the sooner we recognize that this market isn’t at 2005 or 2006 levels and is more in line with 2001-2002 levels, the better off everyone will be. Sales are up over the previous month and that’s a trend we’d like to see continue.
The reason transactions are up is twofold. Sellers have finally reacted and priced their homes where the buyers are actually buying, and buyers have recognized a buying opportunity and are getting back into the market now that they can afford to again.
Affordability is back into the market, and it was needed because the average person was getting priced out of the market. Sellers grudgingly responded, and sales are picking up. Price, supply, and demand always have a way of dictating sales.
Are all sellers priced correctly? That answer is no! The sellers who are priced correctly have a good chance at selling, and many are selling. Over pricing a property is nothing new, in fact even in the hot 2005 market not all properties sold as we did have some greedy sellers. Our 20 years of selling experience tells us there will always be over priced sellers, regardless of whether it’s an up, down, or sideways market. The key is determining where you need to be and then being there.