It’s time for the December 2007 SCR market update. So how did the November numbers look? Bears will be reassured to see closed sales dropped by ~16% in November 2007 compared to October 2007; nevertheless, this is not completely unexpected due to seasonal effects from Thanksgiving and Christmas. However, comparing November 2006 and November 2007, we find that year over year sales increased by 15.25%. Median closed prices for November showed 2.53% growth versus same time last year. In short, these indicators show a normal seasonal slowdown and prices stable in most neighborhoods.
One interesting observation is that in the fall of 2006, buyers were concerned about a potential housing bubble. They decided to sit out of the market in November/December. By late January, we saw a surge in sales and pricing strength as nervous buyers realized the bargains were not to be had and all came back at the same time. This time around, the sub-prime mortgage news has created the same wait and see market sentiment for homebuyers. Will history repeat itself and will everyone come back into the market at the same time? It is quite possbile that we will see another surge in buying activity after the new year. Anecdotally, I personally have started hearing from a lot more buyers in November than I did in October.
With the low interest rates and high inventory, this month presents a great opportunity for homebuyers who are ready to pull the trigger. Most sellers will be very flexible and motivated to have a contract signed before the new year. Here are a couple of incentives that I have come across. Come next year, if deferred buyers decide to re-enter the market, the power will start to shift once again.
1.) Price reduction
2.) 2/1 buy down loan program- Seller paying down buyer’s interest rate which help home buyers to reduce their monthly payment for the first 2 years
3.) Credit at closing- for appliances, homeowner dues and closing costs
4.) Finishes upgrades- New construction and conversion