Buyer’s market in spring

As you probably know, December is not the best month to sell a home. Fewer than 6,000 homes were

sold last month out of 35,000 on the market.

Ratios like that mean happy buyers and frustrated sellers.

Sales chances were 17 percent last month — a smidgen higher than in previous months. It definitely was still a buyer’s market. Sales chances might rise in the spring as the market heats back up, but only if people feel like buying and we don’t get a flood of new listings like we did in spring 2006.

Sales chances are calculated by dividing a month’s sales figures by the inventory on the last day of the month, resulting in a percentage. A figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.

Even if chances rise in the spring, 2007 almost certainly will be a buyer’s market. We just have too much surplus inventory. Plus, with so many homeowners sitting on piles of equity, the incentive to sell will remain strong.

The number of listings dropped quite a bit at the end of 2006. During the fourth quarter, the number of new listings fell to 29,400, compared to 46,700 in the third quarter.

Much of that is seasonal. The fourth quarter always sees the fewest listings. However, 40,000 homes were listed for sale in the fourth quarter of 2005, when everyone decided to bail out, so from that perspective, 29,400 doesn’t seem so high.

How will we know what kind of a market 2007 will be? January and February are too easily affected by the weather, and the market is just getting started then.

I would say that by the time first-quarter 2007 data is available, we should have a pretty good idea how many people are selling, how many are buying and what that means for the market overall.

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Contact Chris Sicks by e-mail (csicks@gmail.com).

The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.