Hard Facts on the Housing Market

I have a confession to make. I am married to somewhat of a data geek. He can spend hours slicing and dicing data. Yes, on the surface it may appear he has a boring hobby but, since he is licensed as both a Real Estate Broker and Certified Public Accountant, most of his number crunching exercises are interesting to me as they are very analytical and are related to local real estate market conditions.

Recently he downloaded statistical detail of the last 3 years of Montgomery County home sales from the local multiple listing service database. He then compared 2009 results to the prior two years to determine how market conditions have changed. There was no “Eureka!” moment since we all know we’re in a bearish housing market. But looking at the hard evidence really drove home how Montgomery County has been affected by our nation’s housing woes. Fortunately, our home prices have held up fairly well, but the demand for housing has fallen dramatically.

In looking at the data, the first thing that stood out was that the number of homes sold in Montgomery County took a drastic decline after 2007. 2008 declined by 21% and 2009 piled on another 6% decline. The two year slide translated to about 2,000 fewer homes sold in 2009 versus 2007. All areas of the county had similar experience. And although the average home price was fairly stable at a positive .5%, the increase was a result of the average home size increasing 2.6% combined with the price per square foot declining 2.1%. So, on an apples and apples basis, home prices have modestly declined. Furthermore, the average length of time on the market increased from 99 days in 2007 to 140 days in 2009. Interestingly, these results have taken place at almost every price point. The one exception is in higher end homes where prices have been discounted more deeply and homes have taken even longer to sell.

An area that really hits to the heart of our current economic recession is new construction. In isolating the data related solely to new home sales, we see that sales have fallen off even more dramatically. The Woodlands area, which consistently generates almost 60% of the new homes sales in Montgomery County, had 36% fewer sales in 2009 than in 2007. The Lake Conroe area, which generates about 20% of new home sales, had 48% fewer sales. For all of Montgomery County, new home sales dropped off an average of 38% which accounted for 632 fewer new homes sold in 2009 versus 2007. Based on the 2009 average new home price of $282,311, this drop off in new home sales translates to and estimated 178 million fewer dollars spent in Montgomery County on new homes compared to 2007. That represents a lot of lost construction jobs and lost sales of construction materials to our local economy. Those lost dollars ripple throughout our community and affect everyone.

But all is not gloom and doom. The most recent sales data supports a case for cautious optimism. New home sales as well as used home sales have increased in the last three month period when compared to the same three month period one year earlier. Although it is still well below the same three month period two years earlier, perhaps it means we’ve seen the bottom of the bear housing market and are beginning to climb our way back to better times.

While this may have been interesting info, what does it mean to potential home buyers and sellers? To home buyers, I would encourage you to consider the purchase of a home. With prices down, interest rates low, and tax credits still available, there may never be a better time to purchase a home than right now. If you’ve been thinking about selling your home, this may also be a good time. Inventory levels have come down and as buyers become more confident in the economy, demand for housing should increase. And to both potential buyers and sellers, I would recommend enlisting the help of an experienced, full-time, local realtor to help you with the process. Intimate knowledge of local market conditions has never been more important.

If you are interested in buying or selling a home, please give me a call. I have the knowledge and experience to maximize the value in your next real estate transaction.