Small Town News

Christensen cautiously optimistic about market

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One of the questions I get multiple times a week is "What's the market doing?" or "What's the market going to do?"

If you have read any of my previous columns, you will remember I am becoming increasingly, but cautiously, optimistic. As British Prime Minister Winston Churchill once so famously said, "This is not the end, it is not even the beginning of the end, but it may be the end of the beginning."

Of course, Churchill's troubles were just a tad more alarming than ours, but I think the parallel is accurate. We are not out of the woods by a long way, but we have weathered the worst of it and the extremely good buying opportunities may start to be a little harder to find.

One of the statistics that we track very closely is one called Absorption Rate. We break the market down into 10 different price segments and compare the active listings with the number of solds in each category, over the last six months.

When you divide the active listings by the number of solds, it will tell you how many months would be needed to sell that inventory if no new listings were added.

A balanced market is a five to six months' Absorption Rate. In January, the lowest rate in any price category was 18 months, and the highest was 10 years yes, 10 years not exactly the sign of a healthy market. By November, those numbers had changed dramatically. Two price categories ($250,000 and under, and $250,001-$400,000) were 7 months or lower. Every price category except one ($1 million to $1.25 million) had decreased significantly. This means that buyers are snapping up many of the good deals, in many different price ranges, and if inventory continues to fall (down 12 percent since April's annual high) then the window of opportunity for buyers will be closing fast.

When you factor in interest rates being at all time record lows, even better than just a few years ago, and the improved Federal Home Buyer Tax Credit, you realize the only thing holding this market back is the general economy and consumer confidence.

Another key indicator is the unusually high number of cash sales that are taking place; investors are now jumping into the market before prices begin to rise.

If we start to get consistently good news this spring about the economy, then real estate, at least in Sedona, will start to improve quickly. Now, we will still have foreclosures and short sales to work through, and that will take some time, but for the first time in a long time we are actually looking at better days ahead.

Real Estate Bulletin, written this month by Tod Christensen of Coldwell Banker, appears on the last Friday of every month the Sedona Red Rock News.



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© 2010 Sedona Red Rock News Sedona, Arizona. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from DAS.

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