- The Washington Times - Friday, July 3, 2009

Before we look at this year’s data, allow me to set the stage with a little recent history. In May 2006, Realtors posted 20,500 homes for sale in our region as property owners tried to sell before the housing market worsened. That is more homes in one month than Washington has ever seen.

The flood of sellers in 2006 did severe damage to area home prices. Home shoppers enjoyed an abundance of inventory to choose from, and they found that most sellers were eager to negotiate.

One by one, each of those transactions knocked down home prices because buyers held the high ground almost every time. They negotiated home prices down a little more each month simply because the home supply was so much greater than the demand.

To download a PDF of the chart, click here.

Since 2006, fewer homes have been listed, as the adjacent charts show. Because demand was so weak, the inventory of unsold homes remained high, and that maintained the downward pressure on prices.

This year, however, we have finally seen a significant drop in home listings and an equally encouraging uptick in sales. In May, just 11,300 homes were put on the market. Listings for the first five months of 2009 totaled 54,000 (compared to 87,000 in 2006).

While this is helpful, the market has a long way to go, and dangers remain. A record number of homeowners are behind on their mortgage payments, yet lenders haven’t foreclosed on many of them because they are so backlogged with other problem loans.

Perhaps many of the borrowers who are behind on their payments will catch up soon and keep their homes. If the economy remains weak and unemployment figures remain high, we could see many more home foreclosures in the coming year. That would mean more home listings at a time when we need less of them.

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

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