Howard County Home Sales – Novembe 2008
Metropolitan Regional Information Services (“MRIS”) just released home sale statistics for Howard County in October 2008, and home sales took their biggest hit of 2008.
Of 1,759 homes for sale last month only 124 sold – or 1 out of 14.2 – meaning we had a 14.2 month “inventory” level (it would take 14.2 months to sell all current homes on the market at last month’s sales level assuming no new homes came on the market).
That is a significant fall from October’s figure of 9.1 months. For the homes that did sell last month the average time-on-market was 120. The average sales price was 9.9% below the seller’s asking price. [For complete details of November's sales and/or a pdf file of prior months' Howard County home sales click here].
What happened?
Although real estate trends tend to be complex with a variety of factors influencing the market, I think last month’s fall is pretty easy to understand. The evening news, with a nightly drone of “economic meltdown” and “Great Depression II”, scared the living cr*p out of people! (MSNBC.com even has a new speciality section “The Economy In Turmoil”).
In October and November consumer spending on everything fell, and the bigger the price tag (big screen TV’s, cars) the harder sales fell. So, why wouldn’t home sales – the largest investment most people ever make – fall too? So, while I don’t believe Howard County home sales will bounce back immediately to ’05 levels, neither do I believe last month is a true measure of the market. Rather, I believe it was an over-reaction to the media’s over-reaction to some legitimate, but limited, economic bad news.
Where to from here?
Because of the strong employment corridor between Baltimore and DC, home sales in Howard County Maryland are not influenced much by seasons of the year. Rather, our home sales are influenced mostly by “economic mood”.
And, there is a decent chance for an up-tic in economic mood. Partly it will be in public perception – the public is already getting “media fatigue” with the economy, and the media will soon shift it’s attention to Obama’s new administration and his first 100 days in office.
Also, there are substantive changes that will improve economic mood, at least in housing. Interest rates had been climbing for most of 2008, but over the past 60 days rates have fallen a full percent. You can get a 30 year fixed rate loan for just 5.25%, and there is new the feds may push for even lower rates. (Check mortgage rates on WellsFargo.com here).
True, go-go days of loose credit are gone forever – today people actually have to qualify in order to get a mortgage! But, when rates fall the cost of buying falls and, with it, (usually) comes increased demand.
The stock market seems to be stabilizing, the public is tiring of the media’s negative drone on the economy, and the fundamentals for buying real estate are improving.
I’m not predicting a return to 2005’s peak performance – but I am saying November’s huge fall in Howard County home sales is not an indicator of things to come. The market may well level off and find “balance” in ’09 for the first time in three years.
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