The Washington-area housing market plodded along in November, producing no surprises, good or bad.
Perhaps the quickest way to grasp how our existing-homes market is doing is to look at the bottom chart.
The lines across the top show the inventory each month - the number of unsold homes on the last day of the month. The bottom lines show the total existing-home sales for each month.
The easiest way to understand the competitiveness of the housing market is to see how far apart the inventory and sales lines are. When they are far apart, as they were in 2008, we are saddled with a lot more homes than buyers who want to purchase them. That causes the market to stagnate, keeps prices down and frustrates sellers.
When the lines get closer, it is a sign that things are improving. You can see that in the spring of 2010, inventory was down and sales were up. As a result, sales chances climbed quite high, buyers competed, and prices rose.
(Sales chances are calculated by dividing a month’s sales figures by the inventory on the last day of the month, resulting in a percentage. A figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.)
When the federal tax credits disappeared April 30, sales dropped and inventory remained flat.
And that’s where things still stand as we look at November statistics. The inventory line is higher than it was in 2009, and the sales line is lower. With these lines farther apart, the market is less competitive than it was one year ago.
I don’t expect much to change until February or March. Sales always improve early in the year, but another snowy February could delay the sales increase until March.
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