There are signs the market is stabilizing, the rate of declining prices slowing.   After months of increased home sales, real estate news has been pretty upbeat lately.  June’s figures showed signs that we’re finally climbing out of the crater of last fall’s financial crisis. 

When preparing a price analysis for home sellers, professional Realtors like me have had to calculate a one-percent drop in prices per month from the financial panic of mid-September 2008 to sometime about April 2009.  But in the past couple of months, the rate of price decline has slowed as  the number of home sales increased.  In the months of May, June and July the inventory index finally returned to the range of previous years.  

Although paved by government stimulus spending, the road back is bumpy, as seen by the rise in inventory last month.  But there’s reason to believe sales will increase this Fall, bringing the inventory index even lower.  That would be good news for sellers.

 Why do I expect the inventory to drop on rising sales again this Autumn?  The $8,000 tax credit for first-time buyers, which expires December 1st, incentivizes first-time buyers and frees move-up buyers in the process.  Early faint indices of an economic recovery have increased buyer confidence.   And typically, until the past three years, the Fall has been the second best time to sell your home.  With summer vacations over people get serious about life again after Labor Day. 

It’s the past three years that have been unusual, the exception to the rule that Fall is the second-best time to sell your home.  In the fall of 2006 (yellow) we were in the first year of a depressed housing market.  August 2007 (red) saw the sub-prime mortgage meltdown and in September 2008 (blue), Wall Street dragged us all over the cliff.  These were all exceptional drags on home sales.  But as a few signs of  economic recovery now appear on the horizon, 2009 may be the first return to a “normal” fall season since 2005.

A quick look at median home price trends (from Otteau Appraisal) supports this view:

As home prices have dropped, affordability has improved.  The affordability index is 100% when the median family can afford the median-priced home.  In Hunterdon County, this index was at 84% in 2006; prices were too high.  With lower prices last year, home affiordability returned to over 100%.  In short, an end to the financial panic, more optimism about the economy, policy incentives, and affordability combine to make this Fall a moment of opportunity.  Don’t miss the moment.

Call me for a free home sale price analysis and marketing plan for your Hunterdon home! 

Don Sherblom   Personal Service, Professional Results!
       908 303-8130 or email me here.

              ClintonRealEstate.com

NJBiz.com  (8/6/09)
Report: New Jersey Housing Market on Faster Road to Recovery