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Signs of the Real Estate Market Bottom

Posted by Sherry Rioux on November 3, 2008

Part 5 of a 5 post series

How do we know when we’ve hit the bottom of the market?  It’s part science and part gut instinct I’d say.  As a REALTOR®, I notice things like phones ringing more, showings increasing, recreational property sales reviving, fewer price reductions and that type of thing.  We don’t always quantify these but we notice and feel the trends.  It’s not happening yet.

The performance of real estate markets lags behind national economic cycles so these are important early indicators to watch.  Since money supply is generated in part through the stock market, a recovery in that sector is a positive indicator. We’ll see commercial vacancy rates start to decline and, there will be improved banking credit appearing in the private sector. Interest rate decreases will stop and then either hold or start to creep up.

Beyond that, there are several more local market key indicators to watch:

 The number of sales:  this is the number of units sold month over month.  As different markets may follow differing seasonal trends, year over year comparisons are important,

• The ratio of listings to sales:  This is the percentage of listings that sell.  We look at the number of new listings each month divided by the number of sales to arrive at this ratio.  Two or three months of an improving ratio is evidence of a trend.  This is perhaps the most important indicator of all.

 A declining number of listings:  Things tend to be at their worst just before the end of the cycle.  By then, Sellers will have given up trying to sell their homes and the listing inventory will likely start to decrease.  Again, watch for a trend.  Right now, listing inventories are still climbing.

• Fewer days on market

• Properties selling at a higher percentage of the asking price (currently around 94%)

Here is a chart showing the sales to listing ratio’s in the Georgian Triangle market for the last three years:

Economists are starting to venture forth with predicitions (how do they do that?) saying look for the bottom next spring.  We’ll see.

Related Posts:

Part1: So, How’s The Real Estate Market You Ask?
Part2: The Things Sellers Need To Consider Right Now
Part 3: The Things Buyers Need To Consider Right Now
Part 4: Are We Close to the Bottom of This Real Estate Market Cycle?

When it’s time to buy or sell real estate in the Collingwood, Blue Mountain or Georgian Triangle area, contact Marg, an experienced and competent Broker who’s ready whenever you are!

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