The August real estate cycle is back.

In many of the preceding years in our local market, the normal ebbs and flows that follow the calendar (spring market, holidays, etc) largely got leveled out.  People are going on vacations in August and it looks like they are taking a break until the new school year to continue their home searches.  From my perspective, this normal seasonality is a good thing, though it’s certainly interesting that this is occurring now.  Why?  Well, rates have come down by about a percentage point in the last 4-6 weeks, but that has not engendered an increase in buying activity or sales.  In fact sales declined yet again last week from 521 to 496.

One likely explanation for this is that the economic outlook is not as rosy as is being reported, or for that matter what the administration has been putting out there.  As an example, this week the job creation figures for the last year were revised downwards by over 800,000!  This is more evidence of what are clearly misleading monthly job creation reports.  They come out with a figure that is widely reported and in some cases lauded, and then they are quietly revised downward a month or two later.  This time the figure was just too big to ignore.  Those 800,000 people know they didn’t get a job.  In addition credit card balances are at the highest levels that they have been in history, and at absurd rates averaging in the upper 20’s percentage wise.  Given these and other economic indicators, it’s unsurprising that the mortgage rate reduction has thus far not moved the needle for buyers.

In July some 60,000 contracts nationally were cancelled by purchasers, a pretty large number and further reinforcing the reality that buyers are much more circumspect than they were in the spring.

Locally our inventory is at 2,231 homes, down from 2,259 last week.  This translates into a 1.2 months supply of homes on the market.  The rental market is tighter, sitting at .9 months.

All of this points to an evolving market, and along with the changes to the commission structures makes it ever more important to have an experienced and accomplished broker to work in conjunction with.  Call me with any questions or comments!

It’s a good life.

Chris