WHIPSAW: Charts Say We Are In A Seller's Market!

It has been a while since I looked at the charts for Days On Market (DOM).  This metric is used to determine the average number of days a home is on the market before it sells.

Since sales have been robust and inventories have been down, I thought it would be worthwhile to see how this showed up in the the DOM chart.  The chart is frankly shocking:

The red line shows a 12 month moving average to help see past seasonal volatility.  However, notice where I have placed the circles.  In August 2012 our DOM was 59 days.  This is remarkable because the last time the market was this fast was between November and December of 2007!  And unlike back then, today we are trending in the opposite direction. 

There is another interesting distinction about the current market trends.  Notice that since 2011 we have hit several months of homes reaching 120 days or greater.  Our most recent high reading is as recent as March of 2012 at 122 days.  August's reading of 56 means a 66 day drop...the largest and fastest change in days on market in the past 12 years!

So what could be driving this remarkable shift in market conditions?

First, I think that since inventory levels are so low, the limited supply has meant that quality homes are quickly snatched up.  There is a lot of overpriced junk out there, but those won't sell and they don't count in these statistics.

Second, I think that there has been a lot of pent up demand for housing.  Even though new construction has stood still the past few years, our population has continued to increase.  Also, the proportion of qualified buyers in the market has increased with the population and that has created demand for homes.  Renters are converting back into buyers...though not on the scale we saw in the bubble period.

Third, the market is tuning into the fact that the worst of the price declines are behind us.  Prices hit a floor around November 2011.  Since then we have seen mild appreciation and stabilization in prices.

So what does this mean?

The bottom line is that sellers are more likely sell their homes quicker in today's market than they have been in the past five years.  Of course, they have to have equity in their property and the home has to be in decent shape.  But, if these two conditions are met, there appears to be a great opportunity to sell right now.

If you want to see what your home is worth, CONTACT ME, and let's see how fast we can sell your home.