November Sales Are Down 16%, Should You Be Worried?

By Nikolai Goranov – Wethman Group Buyer Specialist

The November real-estate data came out last week and as reported by the Sun Gazette, the number of closed transactions is down double digits compared to November 2012. Before getting overly concerned, it’s important to remember that a single data point is hardly the indication of a changing trend. In fact, new trends usually don’t become obvious until they are fairly well played out. To put things in perspective, I went back to 2009 and compared how the November data changed year to year (statistics courtesy of RBI):

Period

Closed Transactions

Difference From Previous Period (Units)

Difference From Previous Period (%)

Nov 2013

2,128

-410

-16.2%

Nov 2012

2,538

587

30.1%

Nov 2011

1,951

-368

-15.9%

Nov 2010

2,319

-653

-22.0%

Nov 2009

2,972

It’s a little hard to draw conclusions by just looking at these data points. So to put things in even further perspective, I pulled up a few charts showing monthly sales and price data again going back to 2009:

 

The annual sales pattern is now more easily discernible. It is common knowledge that a lot of real-estate activity takes places during the spring and summer months which leads to more closed transactions. This is followed by a lull during the winter and a corresponding drop in the sales numbers. Still, every year looks a little different because of ever-changing market conditions such as the economy, interest rates, consumer confidence, etc.

Another good chart to look at is the average sales price:

The seasonal highs and lows are visible again, but not as drastic. Still, it bears some thought whether it’s more advantageous to go house hunting during the winter despite the less abundant inventory. This could be covered in more details in a future post. One thing I’d like to point out about the above chart is the stable trend of increasing prices.

As the Sun Gazette article adds, the rest of the sales metrics such as average sales price, days on market and sales price vs. asking price all point to a healthy even if a little overheating market.

It’s also important to keep in mind that real-estate is invariably local. The above charts talk about the general picture, but I’ve had very differing experiences in my transactions. To win the contract on a one-bedroom condo in Arlington’s Colonial Village, my clients had to put forward an extremely aggressive offer because they were competing with seven other buyers. The sales price was over asking with no contingencies and no seller subsidies. Two months later another client was able to get below asking price, a generous period to closing and decent seller subsidy on a townhome off Route 1 in Alexandria. And they also had FHA financing which is often perceived less favorably by sellers than conventional one.

In conclusion, staying abreast of market data is useful, but having a real-estate agent with local market knowledge on your side will make you even better prepared.

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