New listings down, pending sales down, and closed sales down! Uh oh, is the market recovery halting?
At first glance this seems to be the case. After all, these are some of our most relevant metrics we measure and they are going in the wrong direction. However, if you dig deeper these negative numbers tell a positive story. This is a story I have been telling for many months; change in the types of sales.
Residential real estate listings can be broken into 3 types: Traditional, short sale and foreclosure (the latter two are also referred to as “distressed properties”). In November we saw a dramatic decline in both short sale listings (-42%) and foreclosure listings (-36%). Meanwhile, traditional listings increased 11%. This is doubly good news for the health of the residential real estate market. 1st off, distressed property listings are down meaning fewer homeowners are in financial distress. In addition, traditional listing are up during a time period that is traditionally flat due to the time of year (and temperature outside, the high was -2 degrees today!). This alludes to the increased confidence that sellers have in the market and bodes well for the upcoming year. Furthermore, the median sales price is up 13% because traditional sales typically sell for a higher price.
There is much to be optimistic about, but I am downright giddy about the decrease in lender mediated sales. The residential real estate market will be stronger with less distressed properties on the market and this trend will almost certainly continue.
Stay tuned for the next installment when I will review the year as a whole and make some predictions for 2014.