November Market Update

While we experienced exceptional activity in our local real estate markets from about 2001 - 2005, it’s important to remember that real estate is a cyclical business. Historically, the Midwest has always been slower than coastal markets, remaining steady and somewhat predictable; we tend not to undergo some of the extreme highs and lows that other markets do. And, similar to its cyclical nature, real estate is seasonal with activity slowing in autumn and around the holidays.

Builders and buyers continue to exercise caution, which has resulted in inventory growing at a slower pace than the record levels of 2006. In fact, while it’s still at historic highs, inventory is only 10 percent above this same time last year. This is good news for thinning out the number of homes for sale, which, combined with the average selling price coming down, indicates that we’re poised for a slow, steady market comeback. To help put the current market into perspective, we should recognize that according to the National Association of REALTORs® (NAR), 2007 will be the fifth highest year on record for existing homes sales!

We see motivated buyers and sellers, but at the same time, we’re now experiencing a return to more traditional, stricter lending practices that were in effect before the boom. According to NAR, conditions in the mortgage market are improving overall for consumers, which will help to release some pent up demand in early 2008. And, while tighter credit standards are believed to be a factor in the recent decline in home sales, the decline in home prices and interest rates have also helped keep housing affordable. While some sellers may wish for a higher sale price, it’s important to remember that most sellers are also buyers – and this market offers great buyer opportunities, whether it’s your first home, next home, vacation home, or an investment property.