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Charting the market: Sales make little dent in inventory

- The Washington Times - Thursday, October 28, 2010

It was harder to sell a home in September than at any point this year. Believe it or not, it actually was easier to sell a home in February - when we were buried in snow - than it was last month.

Why is that? Because of supply and demand. It's a simple math equation, really.

At the beginning of the year, the area's inventory of unsold homes was just over 31,000. Despite all the snow, 6,278 existing homes were sold in the Washington area in February. So, about 20 percent of the inventory was sold that month, and that percentage is something I call "sales chances."

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.

With sales chances of 20 percent, February was a moderate buyer's market. In March and April, sales exploded, while inventory rose at a comparatively slower pace. The result was sales chances of 31 percent in April, indicating a definite seller's market.

Since then, however, inventory has remained high while sales have fallen. Sales chances have fallen, too.

Looking at September figures, we find that 6,494 homes were sold - just a bit higher than in February. The problem is, September's inventory was almost 38,000, compared to 31,590 in February. Sales chances last month were down to 17 percent.

What does all this mean to you as a buyer or a seller? Buyers are in great shape. There are plenty of houses to choose, and not much competition from other buyers.

Sellers must recognize how many other sellers they are competing with. Prepare and price your home accordingly, or buyers will just move along to the sign down the block.

Send e-mail to 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.

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