- The Washington Times - Friday, December 18, 2009

As expected, sales of existing homes fell in November. Last month’s sales were down by more than 2,000 homes compared to October.

However, that doesn’t mean the market is slowing in a broad sense. November and December are always the slowest months of the year for Washington-area real estate. You can see this on the adjacent fever chart. This chart clearly shows that sales are always highest in the spring and taper off through the rest of the year.

You’ll also notice that this year’s sales didn’t fall as much as they normally would after the busy spring market - until last month.

Still, when you compare last month’s sales to November 2008, you find that they were 16 percent higher, so buyer activity is still stronger than it has been in the past two years.

Although we will likely see sales drop a little further in December, I expect to see a surge in sales activity early in 2010. I wouldn’t be surprised if we also find prices rising a bit in the most-popular jurisdictions during the first half of next year.

There are three reasons this could happen. First, the inventory of homes for sale is down. There were 35,000 homes available to buyers at the end of November, a 23-percent drop compared to a year ago. That means a larger number of buyers will be competing for a smaller number of homes, and that dynamic is what drives changes in home prices.

Second, the extremely low mortgage interest rates make homes more affordable to more buyers.

Third, the federal tax credits will spur buyer demand. These credits are only available to those who have a ratified purchase contract by April 30, 2010, so we are likely to see significant buyer demand during the first four months of next year.

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

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