“Back to Basics”
In our first publication in February 08, my Market Update “Back to Basics” reported on a few corrective signs from the 4th quarter of 07. Most significant of these was that our historical run up of inventory (26,330 in October of 07) was leveling off. I labeled this statistical marker as “good news” and hoped for a continuation of more positive movement in the 1st quarter of 08.

“Positive Signs ...Improving Trends”
In our 2nd edition in May 08 the article “Positive Signs….Improving Trends” verified in fact that the 1st quarter of 08 indeed offered a continuation of metrics that were moving in the right direction: inventory fell below 26,000 and stayed in mostly a downward trend for the quarter, home sales began the incredible painfully slow but certain upward trend, days on market however was the albatross that hung on every sellers’ home as it reached 130 days (later adjusted to 128). This is an indication that listing prices were still too high for many buyers to believe that the bottom of the market was in sight or more correctly stated that the potential for further price decrease was still a certain probability. Also stated was the concern the oil prices might have on our housing recovery.

Our Housing Market: “All things bad and wicked”
So here we are with our 3rd publication looking back at the 2nd quarter of 2008 having experienced some of the most depressing and demoralizing economic data in our recent history. Oil prices are escalating seemingly out of control as the dollar sets new records for weakness. And while we may be statistically on the downward side of the mortgage crisis you would never know it from our nightly news casts. And if the media runs-out of bad mortgage news they always have the downward spiral of the stock market to report. So now that we are in the 3rd quarter of 08, what additional bad news can be expected from our meager housing market, the apparent catalyst of all things bad and wicked in our society today?? What are the miserable numbers for June Inventory, Sales and Average Days on Market (ADOM) and how bad are they? Courtesy of our Orlando Real Estate Realtors Association (ORRA) see Table 1 below for June’s statistics.

Table Number 1

But wait! When we line up these June numbers with the entire 2nd quarter (Table 2) we actually have positive news to report. Our local real estate industry continues to improve!!! And the even better news is that the methodical and deliberate positive trends we had hoped for are actually happening.

Table Number 2

Our June INVENTORY again DECREASED for the quarter. We are now considerably below the 25,000 mark since our high of 26,330 (October 07) which means our back log of homes (months of inventory) has been declining from a high of above 31 months in January 08 to an approximate 16 months for the most recent month of June. While some economists suggest a normal market consists of around 6 months back log of inventory we are at least making considerable headway in reduction. This significant decrease of inventory is of course accompanied by a corresponding INCREASE in SALES. Table 2 delineates our 2nd quarter Sales activity and clearly demonstrates the continued increase in sales from April to May to June. The quarterly increase of 212 homes sales from April through June represents a 17% increase and is a substantial upward trend. An additional indicator of continued pricing pressure on sellers to adjust their listing prices to the market is the continuation of our high number of ADOM. Table 2 shows that we continue to hover around the 120 plus figure indicating buyers are still taking considerable time to make a purchase decision but that the increase in sales means there are more of them. And the consistencies of these improvements are even more apparent when viewed since January of this year as can be seen from Table 3 below. Viewing this data does state a compelling basis for an understanding of where the bottom of our market is and where we are headed. We do have a long way to go to reach a normal market but the trends are clear and we should take comfort that we are in the recovery process.

Table Number 3

A good visual analogy of our real estate market, even our local one, is that it is like a huge ocean liner on a long journey over a large ocean represented by time. This ship is so large that its movement through the ocean, (time), is almost imperceptible and the only way to determine if your are changing direction is by looking at your wake in the water. So look at our wake in the water by looking at table 4. This is the same table used in our last article in May and when we combine 1st and 2nd quarters of this year to sample months of previous years you can see where we have been and perhaps that we have changed direction several times in the course of our journey.

Table Number 4

The 05 and 06 years represented the ramping up of our real estate market and a corresponding decline and adjustment commenced beginning 07 into 08. And while we are continuing to see improvement in most if not all real estate metrics it’s slow and forecasted to continue at a moderate pace. There are many who would hope for a recovery at a far quicker pace but the reality is we need this deliberate and methodical correction period so that the eventual recovery is SLOW BUT SURE.