The State of the Market – June 2008

The residential properties sold in the month of June here in the New River Valley have been closed out in MLS, and the new numbers are in (thank you, Aaron, for compiling them).  Since we now have two complete quarters in the book, we’ll first post the numbers for this month, then dig a little deeper into reports for the entire year. 

When it comes to absorption rates, we’re looking at how long it would take to sell the existing
residential inventory in a particular area, if nothing else came on the
market until supply was exhausted.  Anything over 5 months is typically
a buyers’ market, and anything less than 5 months is typically a
seller’s market.

Area Active    Sold      Absorption Rate    Buyer/Seller Market 
Blacksburg 235 62 3.79 Months Seller
Christiansburg 276 54 5.11 Months Balanced
Montgomery County 68 7 9.71 Months Buyer
Floyd County 109 9 12.11 Months Buyer
Giles County 96 9 10.67 Months Buyer
Pulaski 102 14 7.29 Months Buyer
Dublin 120 22 5.45 Months Balanced – Buyer
Radford 109 13 8.38 Months Buyer

Why does the absorption rate matter?  It’s supply and demand, really.  What’s the supply in a particular area of the New River Valley, and what’s the corresponding demand for that supply?  Over the last several months, absorption rates have stayed relatively high, indicating a shift toward longer selling times, and a buyer’s market.  There are fluctuations within each area – because of particular products available, creation or elimination of jobs, or school schedules, for instance – but on average the markets for 2008 have remained firmly in the buyers’ favor.

A reader emailed me after last month’s post and asked why I wasn’t using more of the MLS data in each months report.  More MLS data would include things like price changes, days on market, etc., and the absorption rate is a quick snapshot of the market average.  Given that we’ve now got two quarters behind us for the year, I thought I’d do a comparison of the market through the first two quarters of 2008, and compare it to the same time period of 2007, in the eight areas listed above (Dublin has been lumped into Pulaski, for this table).

Area  2007 DOM   2008 DOM 
 2007 Avg Sales Price   2008 Avg Sales Price 
Blacksburg 111 94 $227,768 $240,515
Christiansburg 129 110 $187,649 $184,151
Montgomery County 144 118 $284,350 $254,777
Floyd County 178 129 $185,152 $181,515
Giles County 161 138 $131,986 $114,707
Pulaski 146 119 $154,155 $153,139
Dublin —– —– —– —–
Radford 140 120 $155,024 $154,932

It’s an interesting look at the market, I think … YTD in 2007 vs. 2008, the Days On Market has gone down in every single area, yet prices have fallen in every market (on average almost 5%) but Blacksburg (which has gone UP 5%).  Safe to say the market here has shifted to the south side of stable during the first quarter of 2008.  Nevertheless, homes are still selling.  I had this conversation with another agent and her client at a closing we had this morning – if the home is priced well, shows well, and is exposed to the market, we WILL get it sold.  

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