- The Washington Times - Friday, January 29, 2010

As 2009 came to an end, the Washington-area housing market was more favorable to buyers than it had been since February.

Sales chances fell to 17 percent in December because sales dropped to about 5,300. While that made December the slowest month of 2009, December is always the worst sales month of the year. Last month was the best December we’ve seen since 2006.

What’s important is that inventory fell along with sales, dropping from 32,745 in November to 30,494 in December. We need to consider both sales and inventory because the combination of those two figures is what tells us whether the market favors buyers or sellers or is relatively neutral.

Looking at today’s bottom chart, you’ll see that the sales and inventory lines for 2009 were much closer together than the lines were in 2008. That’s what we want to see.

PDF: Charting the market

In 2008, inventory was too high, and sales were too low. That meant buyers had so much leverage over sellers that buyers could negotiate prices downward. And that’s just what they did, causing prices to drop sharply in 2008.

By December 2008, sales chances were down to 13 percent, compared with 17 percent last month.

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.

We should expect to see higher chances for January, because sales are likely to rise faster than the inventory does in the first few months of this year.

Send e-mail to csicks@gmail.com.

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