- The Washington Times - Friday, July 24, 2009

With sales still strong and inventory dropping, June was just as good for home sellers as May. Buyers signed contracts on 9,281 existing homes in the Washington area last month, a 26 percent improvement over last June.

Just as important was the drop in unsold inventory. In the spring of 2008, we were stuck with about 52,000 homes waiting for buyers. Because we were only selling about 7,500 homes a month, that backlog of inventory was weighing heavily on the real estate market.

June snapshots: Sales of local existing homes vs. inventory.

Now the inventory is under 40,000 and sales are over 9,000. The combination of those two changes makes all the difference.

That’s why sales chances last month were 24 percent - a vast improvement over June 2007 and 2008, when chances were only 14 percent.

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.

When chances were 14 percent a year ago, buyers were definitely in the catbird seat where they had the upper hand. They could demand price drops and other concessions from sellers. They often got them, and all that negotiating drove area home prices down significantly in the latter half of 2008.

Not anymore. Now that chances are above 20 percent, buyers have started competing with one another again. This year, prices have stabilized and even risen in some areas.

Sales will slow for the rest of the year. It happens every summer and fall because spring is the time most folks are in a home-buying mood.

What’s more important to watch is the relationship between sales and inventory because that determines the competitiveness of our market, and that’s what drives price changes.

Contact Chris Sicks by e-mail ([email protected]).

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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