I’m still thinking of the winter solstice.  When has there been a deeper economic winter here in Hunterdon County?  Most economists don’t expect the economy to percolate again until the summer solstice at the earliest.  But in housing, we can reasonably expect an early spring.  The housing market led us into these dark woods, by more than several months, and it will lead the economy on the way out.

Home buyer remedy:  Mix interest rates below 5% with pent-up demand from last quarter, stir in a large supply of affordable homes (over 20% price decline since 2006) and watch homes go under contract.  That removes the expectation of home prices falling much further.  The market bottoms and begins to recover slightly.  While the Fed brews that up, let’s see where we’ve been. 

In perspective:

The Inventory Index compares each month’s home sales to the total homes for sale.  It’s the best market measure since it pegs the supply of homes to demand, either a drop in demand or a rise in listings can send the index higher.  A “hot” sellers’ market would register 3-5 months on this index.  Not until we return to that level will home prices begin to rise again.  

The graph below of just the last four years shows 2005 was the last good year  in Hunterdon home sales, with a relatively low inventory of homes for sale.

See that bump up in the last quarter of 2008?  That’s the pent-up demand in our home buyers remedy recipe posted above.  

Here’s another look at the last quarter of 2008:

Compare homes under contract in October, November, and December 2008 to either of the past two years and you get a sense of the exceptional chill that went through home buyers after September, as the Wall Street meltdown brought fears of another Great Depression.  This scare happened just as 2008 was beginning to look promising (the September 2008 Inventory Index was below September 2007).  Then the Wall Street mess, and buyers waited on the sidelines, too scared to make a move. 

But their need to move didn’t usually go anywhere either.  Demographic change generates a  demand for almost two million homes a year.  Now the Federal Reserve intends to restart the housing market by buying mortgage-backed securities and, in doing so, lowering the rate on 30-year mortgages to less than 5 percent.   

OK, all bad news and good expectations – Let’s see the Fed lower rates to under 5%, and let’s see a greater number of the homes on the market get priced to the market, and let’s see sales pick up, then we’ll see the effects of this home buyer remedy.  Yes and then we will have missed the best action and, like all those other home sellers, move into the market just a little too late.

What about your home sale?  Please call me (908) 303-8130 for a free consultation or Contact me here.

I look forward to hearing from you and to marketing your home to get it Sold!
Don Sherblom, RE/MAX Town & Country (908) 303-8130
                     Personal Service, Professional Results!