President's Perspective

It's a tough market out there

by Doug McCloud
President

Based on Mr. Carr's definition of residential buyers and sellers markets (When is it a sellers' market?), Central Ohio does not fall neatly into either.

Sales are up - but inventory levels are higher than they ever have been.

September home sales were up 6.9 percent over a year ago (2,420 in '05 versus 2,264 in `04) and we have over six months worth of inventory. Supply of inventory assumes that all conditions will remain the same (which they won't) and no more homes are added to the market (which won't happen), then all the houses will be sold within 6.3 months.

But inventory is up 23.6 percent. Last year we had 12,324 homes on the market in the beginning of September and this year, we had 15,229 listings. So, even though sales are quite a bit higher than they were last year, we have so much inventory, many homes are taking longer to sell…8-10 percent longer in fact.

According to the MLS, homes last month sold in an average of 80 days versus a year ago when they were selling in an average of 73 days. But these are not numbers that you want to quote to your sellers because they don't tell the whole story.

The days on market statistic is drawn only from homes sold. It doesn't include days on the market for listings that were withdrawn or expired. For example, let's say Agent A had the home on the market for 90 days but was not able to get it sold. Agent B then picks up the listing, enters it into the MLS system with a different MLS number and sells it in 68 days. Because the home was not sold under the first MLS number, the first 90 days the home was actually on the market is not factored into the final days on market statistic.

That said, although the days on market statistic produced by MLS statistical reports may not reflect the total number of days homes average on the market in Central Ohio, we can use the change between years as a reflection of what is happening in the market.

In this case, Central Ohio homes took 8-10 percent more time to sell during the 3rd quarter.