After four months of increased homes sales, people are asking:  Has the market stabilized?   In other words, have home prices stopped their downward slide?  The amazing thing about this question is that it follows so closely the question everyone was asking a few months ago:  Are we headed off a cliff?  The answer to both questions seems to be “not quite.”

First, the cliff hanger in the financial sector was rescued, not without great cost.  (Guess we won’t buy that old snake oil of completely self-regulated markets again anytime soon.)  Second, the real estate sector is rebounding from an artificialy low point in this three-year ‘down’ market.  That recent steep decline and rebound stand out in the graph below:

Notice the 5-month hiatus in homes going under contract from October 2008 through February 2009; far lower sales than previous winters.  Yet by June 2009, the rebound reached slightly above last spring.  Four months of gains in home sales is a very good thing but what does this indicate for the future? 

The best gauge of the Hunterdon Market is the inventory index (the number of homes for sale divided by the number placed under contract the previous month).  This index tells us how many months it would take to sell every home on the market at last month’s sales rate.

In June 2009, the inventory index finally crossed the line!  It was lower than last year at this time, lower than 2007, and hit June 2006 levels, just under 10 months.  We’re headed towards the levels of 2005, the last hot seller’s market, but the inventory is still twice as high as in 2005.  The ‘hidden’ inventory of discouraged sellers and would-have-been home sellers probably equals another few months’ supply which will come on as the market improves in the next few months.  This will dampen any quick return to 2005 market conditions.    
            

So what does this mean for your home sale?  Homes market activity varies by price range and by township.  The $8,000 refundable tax credit for first-time buyers has sparked more activity in the lower prices ranges.  First-time buyers provide the home sale closing which enables move-up buyers to move-up, so the credit’s effect ripples through the market.  With a December 2009 expiration, I expect this credit will help make the Fall 2009 season, which starts just after Labor Day, the best home selling environment of the past few years.

We will probably see home prices level off in the coming months or early next year.  We will definitely not see a rise in prices until the current index line reaches that green line, which I don’t expect to happen anytime within the next year.  Only when we get to the levels of 2005 will we see buyers bidding up homes prices.  But we will see a better sales pace this fall and next spring than anytime in recent months and years.  With inventory moving down, things are looking up!    

Please call me (908 303-8130) for a free consultation specific to your home and local market.  See homes offered for sale, all the local listings, at ClintonRealEstate.com and see pictures of recent sales at ClintonJustSold.com 

Don Sherblom, Personal Service, Profesional Results!
RE/MAX Town & Country, 44 Leigh St. in Clinton (908) 303-8130!  

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Thanks, Don Sherblom