Real Estate Stats for December 2011

Many people have opinions on the state of the housing market, but the easiest way to understand current and future conditions is to monitor the movements in the real estate absorption rate.  Mathematically, this is the measurement of current housing supply divided by the current rate of sales, expressed in months of supply.  A simpler way to express the definition of the real estate absorption rate is to say it is the number of months that the market will need to clear out the existing supply of homes assuming no new inventory hits the market.

So how do we put this into perspective.  Consider this: The typical home seller would like to move within two to four months of placing their home on the market, so over time, we have developed expectations in real estate and have defined situations as follows:

• Sellers Market:  1 to 5 months supply of homes – home prices increase
• Balanced Market:  6 months supply of homes – home prices are stable
• Buyers Market:  7 or more months supply of homes – home prices decrease

The number of homes SOLD in the Greater Harrisburg marketplace lagged behind last year’s number.  When you couple demand for homes as reflected in this bar chart with supply of homes as indicated in the Absorption Rate Analysis above, it is clear that home prices will probably continue to soften in the near term.  Sellers need to aggressively price their homes to move or risk having their property linger on the market and become stale.  Buyers who are looking to enter the market will find great prices, abundant inventory and historically low-interest rates to finance a purchase.

Prices in the Greater Harrisburg area have dipped over the past twelve months but remain relatively stable when you compare this region versus other parts of the country.  In general, homes priced in the $100,000 to $200,000 price range have held their values much better than the lower and upper ends of the market.  This trend will probably continue in the near term.

The trend of properties taking longer to sell in the Greater Harrisburg market continues with properties in both Cumberland and Dauphin Counties now taking an average of 110 days to go under agreement.  As mentioned previously, Sellers need to price their homes competitively in order to attract Buyers.  Overpricing a home in this market can cause a property to linger longer and become stale.

Real estate, market activity from Dauphin and Cumberland Counties, PA will be published here on, or about, the 15th of every month for the previous month.  All statistics on this page are compiled from the Central Penn Multiple Listing Service of the Greater Harrisburg Association of Realtors® and may not reflect all market activity within the geographic area.  This data does not include farms, investment properties, raw land or individual lots.  Analysis and commentary are the personal views of the author and have not been endorsed by any company or association he is affiliated with.