Well, we are glad that is over! Local home sales tanked in 2008, a year in which a sales decline was recorded in every single month – with ten of them double digit decreases – and finished with a 13.9% decrease in the number of homes sold compared to the previous year. Combined with the last four months of 2007 we have now gone sixteen months in a row of decreased home sales, and there were double digit decreases in fourteen of those months. Home sales have now dropped in each of the last four years and average annual sales have gone from a peak of 4,100 in 2004 to the current 3,121. This market has never experienced a four year slump in home sales, the previous mark was a three year drop from 1993 to 1995 when sales went from 3,131 per annum to 2,833, a decrease of 10% compared to the current 25% drop so we are in uncharted territory.
About the only good news on the home sales front is that December sales were certainly better than expected, recording a 22% increase over November sales. Normally December sales are less than November sales so maybe this shows that we have hit bottom and sales will start to improve – although we are not betting on that.
The 0.9% decrease in the average selling price for the year is also a first. In the records we have dating back to 1976 there has never been a year over year decrease in the average selling price. The median price also showed a 1.7% drop from $215,720 in 2007 to $212,000 in 2008. In addition to better sales than expected, December also showed some improvement in the average selling price, up 7% from the previous month and halting two months of double digit average price decrease.
The total 2008 sales volume was $783.6 million, a 15% decrease from the previous year and the lowest level since 2000. We have to go all the way back to a 20% drop in 1982 to find the last double digit decrease in annual sales volume.
The homes sold in December averaged 130 days on the market, up from 123 in November but a slight improvement on the 132 days in December 2007. For the year, the homes that sold averaged 112 days on the market which is an improvement over the 115 days on market in 2007. The inventory of homes for sale continues to drop dramatically with just 1,499 active listings at the end of December. This is down 11.5% from November and almost 15% less than the number of homes that were on the market at the end of 2007. Based on the last twelve months sales, the demand is for 260 homes per month so the current supply is about six months, normally referred to as a balanced market. Obviously the reduced inventory is helping to hold up selling prices. Who knows what would have happened to the average selling price if we had sold 4,000 homes in 2008 – the betting is that we could have seen a double digit drop in the average selling price.
We certainly overused down, drop, decrease, decline in this column but that seems to be the story of the year’s home sales. In our next column we will compare what has happened in our market to our neighbors and to the national scene. We will also attempt to come up with a bit of a forecast for the near future of local home sales – although it would probably be better to wait and report after the fact.