News Article From: 07-26-2006
Resale Sales Analysis
June ARMLS Reports reported sales of 7,207, which is a decrease of 351 from May. On a seasonally adjusted basis sales were down 3,045 from June 2005.
There are several different factors that interact to make up the current sales numbers. One of the most significant is the seasonal pattern clearly seen in the graph below. The winter months show the lowest sales volume, while the summer months are the highest in sales. This pattern is true for each year displayed, with the exception of 2006, where April breaks the trend, but May and June have shown signs of returning to that pattern despite June’s slight drop-off.
A second factor is an abnormal market condition. The investor/speculator craze in 2004 and 2005 was just such a condition. Therefore comparing sales numbers to those time periods shows a significant decline, which is not necessarily an indication of the health of our real estate market. I believe a sales level slightly above that for 2003 represents a normal sales level for the
metro area market with current interest rates and job growth.
An important phenomenon to understand is the very significant jump in sales between 2003 and 2004. For most of 2004 and 2005 sales numbers were much higher than would normally have been expected because of the excess home purchases for non-owner occupied purposes. Investor buying was a significant contributor to this increase, and we are now seeing many of these properties re-listed on the market.
Our market is now faced with a mushroomed listing situation which is being driven partly by liquidation attempts for these non-owner occupied homes. Listings continued to climb in June, but the resale sales volume dropped below that of 2003. It is starting to appear that there is slowing of the market even compared to the normal year of 2003. The combination of an over-abundance of listings and the drop in resale sales may start to push listing prices lower.