- - Thursday, January 26, 2012

Sales and inventory both fell at the end of 2011, making it the slowest real estate month of the year in the Washington region.

But it wasn’t a bad month. Although sales were almost exactly the same as in December 2010, the inventory was 20 percent lower.

That’s a big deal. Because the inventory of unsold homes was so low last month, sellers didn’t feel the impact of the lower sales figures as much as they might have.

Here’s what I mean: When sales fall and inventory doesn’t, the ratio moves in favor of buyers, who have less competition but more homes from which to choose.

When sales rise and inventory doesn’t, the ratio begins to favor sellers, who enjoy more attention from buyers who have fewer houses to see.

But when sales and inventory both fall, as we saw in December, the ratio remains steady. That’s why sales chances were 27 percent in December — exactly the same as in July, August and November. Those were months when sales were higher, but so was inventory.

(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.)

Sales chances usually are at their lowest point in December. But it’s encouraging that at 27 percent, last month posted the highest sales chances figure for any December since 2005.

One more thing to notice about the way 2011 ended: With fewer than 20,000 homes on the market on Dec. 31, we wrapped up last year in the best way possible.

We had half as many unsold homes as we did in December 2008. It was that huge backlog of unsold homes that caused our real estate woes and pushed prices down.

Now that inventory is at its lowest point in seven years, 2012 has the opportunity to be a market where buyers compete enough to push prices upward a bit.

Send email to csicks@gmail.com.

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