Ever been in a candy shop? You know, the type where there are candies of all sizes, shapes and colors lining the walls? The shops where you shove a big metal shovel the size of Delaware into a barrel of assorted candies, and you come up with all different types of sweets?
Yea - that's what the real estate market is like right now.
It's not that it's a huge surprise ... the winter is always slower than normal, so we were prepared for that. I can't say anyone saw bailouts of the banks, the construction folks, the auto makers, the pizza bakers and the professional matchmakers, but needless to say here we are.
See how I did that, the whole rhyming thing and all? I know - Eminem I'm not.
Nor am I fan of bailouts of irresponsible mismanagement, but that's a story for another day.
Buyers, if you: (1) have a job, (2) have money to put down and (3) have good - notice I didn't say excellent - credit, our current real estate market will be like walking into that candy shop and taking your pick of everything that's available. I don't mean that you'll get it for pennies on the dollar, but the opportunities are there to pick up excellent values right now. Think about it - if a property is listed now, between the Thanksgiving and Christmas time frame, don't you think that Seller is serious about selling his or her home NOW? I do, and my Sellers are. And it's important to note that when I say you need money to put down I don't mean ten's of thousands of dollars. There are lenders here locally, right now, offering great rates on FHA and other buyer programs that are requiring as little as 3% down, not to mention the free money - yes, free money, not additional loans - that localities like Blacksburg are offering qualified buyers.
Let me post the latest absorption rate numbers for the New River Valley market now, and then check in with folks that might need to sell their home in the next few months. When it comes to absorption rates, we're looking at how long it would take to sell the existing residential inventory in a particular area, if nothing else came on the market until supply was exhausted. Anything over 5 months is typically a buyers' market, and anything less than 5 months is typically a seller's market.
| Area | # of Active Properties | # of Sold Properties |
Absorption Rate |
Buyer/Seller Market |
|---|---|---|---|---|
| Blacksburg | 211 |
12 | 17.58 Months | Buyer |
| Christiansburg | 258 | 13 |
19.85 Months | Buyer |
| Montgomery County | 64 |
0 |
64.00 Months | Buyer |
| Floyd County | 115 | 4 | 28.75 Months | Buyer |
| Giles County | 54 | 1 |
54.00 Months | Buyer |
| Pulaski | 101 | 5 | 20.20 Months | Buyer |
| Dublin | 107 | 4 |
26.75 Months | Buyer |
| Radford | 70 |
3 | 23.33 Months | Buyer |
Sellers, the market's not in your favor now when you look at the numbers above. 28, 54, 64 months worth of inventory? An average of more than two years worth of inventory is a scary thing when you're putting your home on the market, but remember it's not taking EVERYTHING that long. The average for the NRVLiving Team in 2008 is 101 days, or just over 3 months. Some have taken less, some will take more, but we're doing our best to expose our listings in every effective way possible. That being said ... selling right now isn't for everyone. If you bought a townhouse in Christiansburg last year for no money down and expect a 10% return, it might be a good idea to rent for the home for a while. Those are products that are having difficulty selling in today's market, and will need some time to settle out. Nevertheless, there ARE ways to get it sold ... not the least of which includes patience. There is a lot of uncertainty right now, and it's going to take patience and carefully executed marketing to reach buyers who are ready to execute.
At the halfway point of the year, I wrote a post looking at what the market was doing up to that point, and compared it to the year prior. The results were striking, and I'm working on a follow-up for the entire 2008 year that I hope will be helpful. There will be some in the real estate market who will be happy they held off selling, and others that will regret not buying, but the time is not right for everyone. Be patient, find an agent who is studying and demonstrating they know the market they're serving, and grab that shovel - there's candy to be had.
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Your post just goes to show just how much real estate is local...actually hyper-local. The absorption rate in Loudoun and most of Northern Virginia is much lower than yours with our market being pretty balanced based on an average 5.5 month supply.
And I'm sure your market is much better than other markets which have absorption rates and supply much higher than what you have in the Blacksburg area. It could always be worse, right?
Cool analogy btw! And great tips!
Posted by: Danilo Bogdanovic | December 05, 2008 at 09:37 AM