Check it out.. interesting..
the funniest part is this quote.
“President Richard Tegley said, “With a growing inventory of homes in the (listing service) plus a large new-home inventory we will probably see prices level off.””
This article raises a couple questions, that hopefully somebody can answer.
QUOTE
The time that homes sat unsold increased from 42 days in the first five months of 2005 to 48 days during the same period this year.
The supply of unsold homes — measured by how long it would take to deplete the region’s unsold listings at the current sales rate — more than tripled from 2.4 months to 7.6 months, which the listing service said reflects the largest supply since it began recording such data in 1999.
“We have had a growing supply of listings since the middle of last year. But last year the sales were strong and this year the supply of listings has continued to grow and sales have slowed,” said Gordon Maddock, the service’s secretary treasurer.
Maddock said the 48-day listing average may be misleading because it only reflects houses that have sold. He said some houses are unsold after six months.
The number of listings, Maddock said, probably has been bolstered by “a lot of investors dumping properties,” people selling to tap built-up equity, and small home builders putting new homes on the multiple listings in an effort to speed sales.
END QUOTE
Q: How can DOM go from 42 to 48, a 15% increase, while the supply of unsold homes triples? Is there even a relationship between increase in inventory and days on market?
Q: How much of the inventory increase is due to builders putting their new homes on the MLS?
Q: DOM reflects sold homes. Is there a metric which measures unsold homes?
inventory over sales rate IS the forward looking metric. If sales rate doesn’t change, that’s how long it will take to run off the current inventory. DOM is the backward looking metric. If 1,000,000 homes are listed, and 1 sells that month, and it took 30 days to sell that 1 house, then the backward looking metric, DOM, is 30 days, and the forward looking metric, inventory to sales, is 1,000,000 months. The huge discrepancy between the two just shows how quickly sales have fallen and inventory has risen.
.
