The turn of a new year is a time for retrospection, celebration, and optimism. Anything is possible as we put the past behind us and look forward.
After some retrospection, I believe we have plenty to celebrate when it comes to the Bullhead City real estate market of 2009.
Median price down 40% in 3 years
I realize you might take a quick look at current home values and disagree with me. After all, the median sale price in Bullhead City went from $135,000 in 2008 to $114,900 in 2009, and it was a full $193,000 when it peaked in 2006. But why?
While prices were busy climbing to record highs in 2006, so was the inventory. That unfortunate turn set us up for the sharp decline in price we’ve experienced ever since.
Have we hit bottom?
They say you’ll know the bottom of the market when it’s behind you. True as that cliche is, it’s not very helpful for forecasting.
Supply drives price (true and helpful)
When it’s low, it drives prices up. When it’s high, it drives prices down. So rather than guessing if we’ve hit bottom in terms of price, take a look at supply.
Therein lies the good news
When the clock struck midnight last Thursday, the supply of homes for sale in Bullhead City hit a 3 ½ year low. The number of homes on the market is right back where it was in the 1st quarter of 2006, shortly before prices spiked and put our market on a very bad course.
If you plot the supply since then, what you will see is a very long, but very steady course back toward a balanced market.
Take a look:
That brownish-red area shown above is bad news. It means there are too many homes for the current demand. Notice that it peaks at the same point the orange price line does? Homes were already coming on the market much faster than they were selling by the time prices topped out. That excess inventory drove prices down in a classic case of buyer’s market.
Now see how both sale prices and the number of listings have been moving down in sync since the peak? And that the blue area representing sales moved up significantly in 2009?
The brownish-red area has now been cut in half since the worst of it, as we went from a 21.5 month supply of homes in 2008 to a 10.5 month supply at the end of 2009.
Cause for optimism
While many of the market segments are still buyer’s markets, and foreclosures are still weighing down prices, the market is healthier than it has been in several years. Let’s hope it stays the course. I’ll keep you posted.
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