My current Farmington Inventory Summary Summary for the quarter ending September 30, 2010 is now completed (see link to access full report). The report contains data for the first three full quarters of the year (can you believe we are already into the fall?).
Year to date closed sales are up nearly 40% from the same period a year ago while average and median sales prices declined approximately 5% and 7% respectively year to date. So, although unit sales increased, the majority of the increase is occurring in the lower p
rice ranges as you can see in the middle chart where over 60% of the sales activity in 2010 occurred in the under $300,000 price range. For reference, the median sale price for the first three quarters of 2007 was $298,450 (a 14% decrease between 2010 & 2007). The good news, however, is the fact that unit sales are still up year over year. The gains achieved during the early part of the year, thanks to the first time homebuyer tax credit, kept overall sales levels in positive territory in spite of the slow unit sale levels the past several months.
Overall, inventory levels remain elevated with eight months of inventory currently available (six months inventory on hand is generally considered a neutral market). Farmington is not unique in this regard as we see similar trend lines throughout Davis County. The macro economic factors (e.g. unemployment, declining household income levels, restrictive credit markets, etc) continue to impact the housing market. As these economic forces improve, we should begin to see similar improvement in the stability of the housing market (don't confuse stability with increasing sale prices).
Another data metric I track is ‘under contract’ activity. This is a count of the properties which go under contract in any given time period. A property goes under contract when a buyer and seller agree to the terms of a sale but the transaction has yet to close escrow (that process can take anywhere from two weeks to two months to complete – and sometimes even longer). I believe this data point more accurately reflects actual buyer demand at a specific point in time. In the first four months of 2010 (when the tax credit was available) under contract activity was up 90% year over year in Farmington. For the next five months of 2010, under contract activity was on par with the same period in 2009 (106 under contract versus 108 in 2009). August and September under contract activity has been below the activity in 2009 but even so, 2010 appears to be on track to post a 10-15% increase in under contract activity compared to 2009.
How about them foreclosures!?!?! There has been a good deal of rumbling in the real estate industry about the current state of affairs with foreclosure activity. Much of it centered around the documentation process banks utilized to initiate and complete foreclosure actions. There is still a great deal of discussion around this issue and it will likely take a few more months for this to work itself out. One of the key issues to be addressed as a result, is whether or not someone who bought a foreclosed property in the past year or two has actual title to the property. With the documentation issues outstanding, this particular point is now getting more attention as many title insurers have stated they may not provide coverage if title was not provided correctly. People who thought they got a “great deal” on a foreclosure property may find the deal wasn’t as good as they originally thought. This will be an ongoing issue to track over the next several months. For more detail on this topic, please refer to Leslie Ebersole's summary.
Although underwriting standards continue to be strict, interest rates remain at historically low levels. How low? For reference, the last time fixed long term mortgage rates were this low "I Love Lucy" premiered, phone calls from coast to coast first occurred, General MacArthur was fired by President Truman, and the UN opened shop in New York. If you are a buyer in this market, the cost to borrow has not been this low in a long, long time. Combine that with a large inventory available, it makes it a great time to be looking for properties. The advantage to sellers, even in a market such as this, is the low cost to finance allows more buyers to qualify to purchase your home.
So, even in what is considered a down market, there are opportunities availalbe regardless of what side of the transaction you may be located.
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