It may not actually be the beginning of the end of America’s real estate boom, but one of the first indications of a slowdown in the housing market is when homes begin to take longer to sell. Although the National Association of Realtors doesn’t keep track of the nation’s overall home marketing times, but there has been a dramatic rise in the number of homes on the market in the past six months. With the supply of available houses rising, buyers have more homes to choose from, and according to the laws of supply and demand, that means prices in many areas of the country may begin to come down.
Let’s look at some areas of the country to examine trends. In Philadelphia, Pennsylvania, the average marketing time in June 2006 was 33 days. That amounts to an increase of ten days from a year ago. Although the number of sales has remained steady, there are more houses on the market–nearly twice as many, in fact, standing at 36,000 units, as opposed to 21,000 the previous year.
It has traditionally taken longer to sell a home in Nashville, Tennessee (an average of 65 days a year ago) but that figure has risen to 75 days in the current market. In Des Moines, Iowa, the average time on the market has increased from 75 to 82 days, and although prices haven’t fallen, some developers have begun offering rebates and free upgrades to move their homes more quickly.
The figures are even more dramatic in some areas of the country that have been considered hot markets over the past few years. In Hanover, New Hampshire, for instance, which experienced double-digit annual price increases since 2000, the average time on the market has risen to 125 days. Such startling numbers are likely to begin affecting home prices in the near future.
In Napa, California, homes used to sell in two weeks or less, but the average home now sits on the market for 60-90 days. Although residents of the area don’t seem concerned about Napa’s overall future, they may begin to see prices decline as homes continue to take longer to sell.
Other cities are also experiencing longer sales times. Sales time in Boston has risen from 52 to 58 days, Phoenix now takes about 60 days to sell homes that used to sell in less than two weeks, and Miami’s on-market time has increased to nearly 40 days, up from 20 a short time ago.
The bottom line: with on-market times rising across the country, it’s possible that home prices in many areas will begin to decrease. It also means that sellers will need to keep a closer eye on their local markets to make sure their homes are competitively priced if they want a quicker sale. As more and more homes begin to show up on the market, prices will eventually begin to soften. That’s the way supply and demand works. But for now, our most recent real estate boom may be ending.
Copyright © 2006 Jeanette J. Fisher