Analyzing those August market stats - Part 1 September 12, 2008
Posted by brobinson in : For buyers, For sellers, General , trackbackI just can’t help myself. It runs in the family. My mother recently told me that my brother the UNLV professor gave her a statistics lecture as they watched Deal or No Deal on television. I confess to my own graduate degree in economics, Piled Higher and Deeper. So feel free to skip the forthcoming lecture on what the monthly real estate stats and the UH forecasts are really saying!
The question my colleagues and I hear every day is “how far will prices drop?” And “In my home market there are condos selling for 30 cents on the dollar. Do you expect to see that happen here in a year or two?”
Let’s see whether recent news reports shed any light on the questions.
The report per Pacific Business News: Big Island home sales fell by almost half in August 2008 compared with the number of reported sales in August 2007. Year-to-date residential sales are down 33% and condo sales down 27%.
First, what is indisputably important information for you as a buyer or seller: the volume of transactions has declined significantly this year while active listings (inventory) increased. Willing buyers are fewer than this time last year…or in other words demand has decreased while supply is increasing. That means that unless a horde of buyers suddenly ride onto the scene, the market-clearing price at which all the inventory would be sold will have to trend down. Which is exactly what we see daily as price reductions are reported on the MLS. We see it in offers being accepted well below asking price. In other words, exactly what your agent has been telling you: if you are a buyer, it is a better time to buy than a year ago! If you are a seller, you must price realistically for this year’s market if you want to attract buyers.
What we don’t know is at what price the many qualified prospective buyers who are watching the market will begin to jump off the proverbial fence—or whether it is even a question of further price reductions that will give them the confidence to buy. If you are one of those buyers wondering if you should wait for a better price, the best advice I can give you is to work with an agent who is experienced in the particular neighborhood of interest and get them to give you all the data. See Part 2 of this post tomorrow for some suggestions on how to interpret the data.
A hui hou!
Beth
beth@hawaiipalmproperties.com
Cell: 808-443-4588
Hawaii Palm Properties, Inc
Office in downtown Hawi near Bamboo restaurant
www.hawaiipalmproperties.com
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