Reaching the “New Normal”

In my ongoing search to satisfy my curiosity about how real estate is “doing” in Pickens County, I came across some interesting information. It loosely falls in line with the latest forecast by the National Association of Realtors.

I remember reading in 2007 that someone had predicted home prices would have to return to the levels we had prior to 2005 before we would see what the “new normal” would be in the marketplace. That seemed preposterous at the time, since it would be a roll back of something like 25-30% at the time. I’m not really sure if the person who came up with that prediction actually did any research, or if someone said it and the talking heads picked up on it like the “double-dip housing market” last year. (How can you have a double-dip in real estate when there hasn’t been a recovery yet?) In either case, it turned out to be pretty realistic.

I recently showed readers a chart that graphically illustrated the housing market spiraling out of control beginning in the late ‘90’s and really firing up between 2002 and 2004. That’s when the government started artificially stimulating the market with bad loans that increased buyers and demand for homes. When I read the results for real estate in Pickens for November, I saw that we only had 429 active listings, down from highs well into the 600’s over the last several years. I decided to go back to see how long it had been since we had fewer homes for sale in the county, and the answer is May of 2004 when there were 427 active listings. That is well over six years!

Furthermore, in May 2004 we sold 34 homes, wrote contracts on 32 more, had almost 14 months of inventory based on sales, and the average sale price was $155,000.

In November 2011 we sold 29 homes, wrote contracts on 37 more, had 14.8 months of inventory based on sales, and the average price was $222,000. Admittedly, the sale price can fluctuate from month to month, but sales and pending contracts are what they are.

We thought times were pretty good in May 2004, so why does it not feel so good right now? Unemployment is higher, and there are still too many foreclosure sales in our current numbers to say our market is good. However, because the number of homes for sale is obviously shrinking, and there is little happening in the construction of new homes, it would appear that the worst is behind us and the market might be poised to make some positive movement.

So for those of you looking for the bottom of the market, this might be it. If you snooze, you lose!