The Summer Viewing at Pikes Peak Urban Living is on the cat fight between two market metrics: Average Sales Price and Months of Inventory.
Months of Inventory is a handy-dandy metric to forecast, predict or… guess… what the market will do next. The barometer that has traditionally held sway is a 6 month supply of housing equals a neutral market. Get below six months and stay there and the market should see appreciation and increased seller-control. Go above six months, and that much to choose from sways control to buyers and prices drop. The majority of the last four years have been in excess of 6 months with a few brief months in 2009 under 6 months supply. July 1 showed a reading of 5.5 months. After three previous months from 5.9 to 6.1 months of inventory, that should be a predictor of prices going up.
Yet they haven’t done that.
Average price year to date is off 4% from a year ago. A lot of this was the post-tax-credit malaise that wrecked the market last spring. REALTORS went from running their engines at 110% in April to idling them in May, and never really getting them out of neutral the rest of the year. This year has been somewhat spastic, but overall, prices are steady to down then they’re showing appreciation.
Most everyone has an easier time understanding what has happened as opposed to grasping at what might happen, and correspondingly average price gets a lot of press. But as I spoke about last week, the relationship between units for sale and units sold is pointing to possible to likely improvements. The market has crested in inventory and is in the six to seven month cycle of fewer, not greater listings. There will be new listings each month, but not at the rate that they were before, and many good new listings will be recognized more readily as valuable by active buyers because buyers operating in the second half of summer and early fall generally have to make quick decisions. These are general conditions that don’t always hold, but with fewer than 4800 listings for sale, and two more months under 6 month’s supply likely… it will be interesting to see what happens to pricing over the next six months.
To see the active market numbers, Click Here for the Stat Pack.