Nevada County Real Estate Market Metrics-Q1-Q3 2009
Created: 10/26/2009
October 30, 2009 – As the peak selling season for the year winds down and we head into the holidays, there are some interesting numbers in the rearview mirror. Three important trends stand out as encouraging indicators that our local market is stabilizing, or at least experiencing a significant pause in the dramatic correction of the last 4 years.
Median Price – After 3 full years of steep declines in median price, from a high of approximately $450,000 in Q4 2005 to a low of approximately $290,000 in February 2009, median price has been stable around $300,000 and even shown a modest increase of more than 6% since February. It should be borne in mind that a substantial portion of the apparent 35% decline in prices since the peak is simply due to the fact that the more expensive homes are not selling and the lions share of homes sold have been modest properties under $400,000.
There is a modest uptrend in median prices over the last 8 months, and this is the longest uptrend since 2005.
Unit Volume – Seasonal changes in the number of homes sold are the norm, with the peak usually coming in the second quarter, following a low in the first quarter, in our market. Normally the difference between low and peak volumes in a given year is less than 50%, usually a lot less. This year, the increase in units sold from Q1 to Q2 was over 100%. This reflects a general recognition by consumers of excellent pricing, the most favorable interest rates in decades, and significant pent up demand. During 2009, an increasing portion of this volume was due to sales of distressed properties.
There has been a significant increase in unit volume during 2009, more than at any other time since 2004.
Distressed Sales – In a normal or rising market, the percentage of distressed sales (Short Sales and REO) is quite low, usually 5% or less. During 2008, as the number of homeowners facing challenges increased dramatically, this percentage rose into the double digits. In Q1-Q3 2009, this trend accelerated to nearly 50% in Q1, tapered off in Q2, and then peaked at nearly 60% in August. During this period, the available inventory of REO hovered around 5% of total inventory, while Short Sale inventory has been 10-15%. So, a steady 20% of inventory has been responsible for up to 60% of sales. What this means is that there has been an increasing supply of distressed properties, and the market is absorbing them very effectively, so effectively that the inventory at any given time has been relatively constant.
During 2009, the increasing supply of distressed properties has been snapped up by savvy buyers.
The first three quarters of 2009 have been very dynamic in the Nevada County real estate market. Overall unit sales as well as sales of distressed properties have increased dramatically, while median prices have stabilized and begun to show modest increases over an extended period. All of these trends are bucking the usual seasonal variations in one way or another, indicating unusually strong market forces.
When we look back on 2009-2010 in five years or so, will we be smiling or kicking ourselves about how we responded to the current opportunity?
Paul Sieving is a Realtor® with CENTURY 21 Gold Dust Realty, has been Chair of the MLS Committee and a Director of NCAOR and Board Chair of the Grass Valley Chamber of Commerce, while serving our community as a real estate professional for 10 years. Comments, questions and thoughts are welcome at Paul@PaulSieving.com or (530) 274-0906.
