- The Washington Times - Friday, December 4, 2009

Whether you are buying or selling a home, it helps to understand where things stand with supply and demand.

Sellers need to know how big the inventory (or supply) is to appreciate how much competition there is. Knowing something about sales figures will help determine the demand for homes.

Buyers need to study the same data. Unlike sellers, however, they are hoping to find a lot of supply and limited demand. That combination keeps prices low and allows buyers time to make decisions.

Fortunately for buyers and sellers, the market is quite balanced at the moment. That’s the kind of market move-up buyers especially want to see, rather than a strong seller’s or buyer’s market.

In a seller’s market, it is easy to sell your home but hard to buy your next one. In a buyer’s market, it can take a long time to sell but the purchase is relatively easy.

We have seen both types of markets recently. The Washington region was in a very strong seller’s market from 2002 to 2005 - with 2006 being a transition year - and a strong buyer’s market in 2007 and 2008.

With falling inventory and rising sales, 2009 has been a year of transition. To illustrate this, today’s charts show the inventory and sales figures for the month of October over four years.

One of the first things you should notice is how the inventory rose and then fell. The patterns in Prince George’s County are very clear.

The inventory climbed a lot in 2007 and 2008 in Prince George’s but is now smaller by 2,000 homes than it was a year ago.

Next, look at the sales chart. There you will find the opposite pattern. Prince George’s sales fell sharply in 2007, remained low in 2008 and more than doubled in the past year.

The trends have been similar in other jurisdictions, although in some areas, the change came a little earlier with inventory falling and sales rising in 2008.

Looking ahead, I would expect to see a similar balance of inventory and sales during the first half of 2010. The low interest rates and federal tax credits should keep things humming through at least June.

Contact Chris Sicks by e-mail (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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