Graph Showing the Decline in Monthly Real Estate Transactions since 2005

As a residential real estate agent for Llewellyn Realtors, I recently had a chance to study the number of monthly residential housing transactions that occurred in Montgomery County from the year 2000 to the present.  I created a set of tables and two graphs to illustrate results. 

The Pattern 

The upper graph, organizing monthly trends in transactions, shows that January consistently produces the least number of settlements than any other month of the year.  Between January and June, you can see that the number of sales transactions continue to climb, culminating in peak of sales transactions in June.  According to the data, the months of September - December average about the same number of transactions with respect to each other. 

The Change 

When you flip the data and organize the data by years, as in the lower graph, you will note that 2004 and 2005 were top years for sales within Montgomery County.  Compare the peak sales of June 2004 and June 2005 (2075 and 2047), they are relatively the same.  Our settlements in the residential housing market continued to grow between 2000 and 2005.  However, the pattern of growth in summer and fall of 2005 showed a marked decline.  Remember the pattern for the months September - December generally stayed the same in previous years, so this deviation from the pattern indicated a shift in the market conditions. 

The Prediction 

As local real estate agent who participated in transactions throughout the outlined years, I have an opinion for this shift.  I believe that Hurricane Katrina played a big role in the economy of housing and notes that it hit on August 23, 2005.  This was about the time that the market began its decline.  The country experienced immediate and dramatic increases in gasoline costs and had less discretionary income.  As a result, consumer confidence in the economy began to decline significantly.  With 10 - 20 % of the real estate speculation leaving the market it enabled the market to return to a more normal growth which is parallel with homeowner's incomes. 

The old rate of growth in the housing market was out of whack with people's ability to afford housing.  When this adjustment period is over, I predict that housing prices will begin to trend towards a modest gain.