October numbers are still being finalized but the Birmingham AL MLS market is again down from the prior year 31% (or more) and down 17% (minimum) from September. Sales dropped a little more than I projected last month but are not doomsday relative to what we've been experiencing over the past 90-120 days. Months of inventory appears headed higher once again as the number of new listings continues to outpace (1) sales, (2) withdrawals and (3) cancellations on a combined basis. With year-to-date sales (units) for 2010 now down 5-6% for the Birmingham MLS market, the focus for realtors in the last two months of the year will be to (1) capture as many fence-sitting buyers for contracts and (2) work with sellers to maximize exposure and emphasize value.
For potential buyers, especially first time homebuyers, the economics of buying a home are extremely favorable in light of ridiculously low mortgage rates and bargain basement prices. Rates will likely rise over the course of the next 18 months as the elections have passed and the political climate settles. A 1% increase in rate reduces affordability by about $25,000. Coupled with the potential for a nice tax deduction (for those itemizing) and significant equity accumulation in 3-5 years, now is a great time to buy.
For sellers and potential sellers, the inventory of homes is great with lots of choices in virtually all price ranges. The months inventory of homes is now at the highest level of the year. Consider that at current sales levels, it would take roughly 16 months for all the homes on the market to be absorbed assuming no new homes come on the market. Homes that are move-in ready, staged properly (less is more) and priced aggressively will move much more quickly than homes that are not updated and priced at the high end of the range for your neighborhood. As a seller's agent, I negotiate assertively and in my client's best interest but the economics tend to work out much better if the home is a great VALUE. Currently, homes in the Birmingham MLS market are listed for about 134 days before going under contract; from the contract date to closing usually averages another 30 days. As such, a reasonable expectation for your home from the date it is put on the market to closing (i.e., money changes hands and title transfers) is about 164 days or about 5 ½ months! For homes priced above $300,000, it is longer as there is a smaller pool of buyers looking at homes (about 7 months from contract to close). With that much time from market to close, getting needed repairs and updates done quickly can position you to close sooner rather than later (if you are eager to selll).