The first half of 2008 has come to a close. Certainly, it was not the best six months in the history of the Rutherford County real estate market. But despite many people who would have you believe otherwise, January through June was still quite solid. And some indicators are pointing toward an even stronger second half for 2008.
As it has all year, closed residential real estate sales in June were down 36.3 percent, leaving the market off 33.4 percent for the year. However, three stats are cause for optimism.
1.) The average closing price for residential real estate in June 2008 was $178, 293, compared to $188,659 in 2007, a dip of 5.5 percent. You may be asking, “How can dropping prices possibly be a positive sign for the market?”
This bump down in sales prices demonstrates that sellers are finally realizing that we are in a buyers’ market. They have to take a little less for their home than recent comparable sales because our excess inventory gives buyers the ability to walk away from sellers who remain unreasonable on their pricing. The only way to clear out the inventory is for sellers to cut prices or take their homes off the market. The drop in sales prices shows that unrealistic sellers are being replaced by homeowners who are more in tune with what the market is doing.
Keep in mind that from 2005 through 2007 many Rutherford County home values shot up 15-30 percent. What’s happening now is simply the market settling down a bit following a period of rapid appreciation. Giving back five to even 10 percent right now will only help set the stage for continued steady price growth once excess inventory is sold off.
2.) Pending sales are on the rise. The greatest predictor of future closings is the number of pending sales reported. Since the beginning of 2008, pendings have been off 30-35 percent each month compared to 2007. Predictably, the following month’s sales were also off about the same percentage as the previous month’s pendings. June was the first month this year where pendings were down less than 30 percent compared to 2007, coming in at 23.3 percent off (415 pending sales).
Assuming that July follows the trend established since the start of 2008, and sales for the month are off just 20-30 percent, then our market will have 380-435 closed sales, easily establishing the best month of the year so far. (June was Rutherford County’s best month with 368 closed sales.)
3.) Our listing inventory continues to fall. If homes continue to sell at the pace they did in June, we only have 7.2 months of listing inventory remaining, as of July 8. Four to six months of available inventory is considered a balanced market (about equal numbers of buyers and sellers). If listing inventory continues to fall at the current rate, we could be back in a balanced market as early as this fall. In any case, the Rutherford County real estate market appears to have hit the bottom and begun bouncing back up.
We are very optimistic about our real estate market. Great opportunities for buyers and investors still abound. Sellers who are also buying within the market can still make up for a lower-than-expected sales price on their home sale with a great deal on their home purchase. If you’ve been thinking about making a move, don’t wait any longer. The current abundance of great deals gets smaller with each passing day. Give us a call at 615-867-3020 or visit our website.
