The latest national chatter seems to be the debate over whether the government should walk away from supporting the housing market and let it “crash” or continue to assist with various types of federal support…what do you think? I think locally our market has been flat since late 2006 or early 2007, so if there was any over pricing locally, I feel like we’ve absorbed that over the last four years. I think the longstanding supports such as the interest tax deduction and the FHA insurance program should continue, and didn’t seem to contribute to the downturn we’re in now. I’m not convinced that the more recent tax credits have contributed anything toward a real estate recovery.

August is now behind us,and “the market’ continues to trudge along. The actual pending numbers for July came in at 540, continuing the trend we started in May, with Pending sales down each month about 30-35% from the previous year. My projected Pending sales for Central Kentucky real estate in August is 550 (the official LBAR August report has not been released yet). If that number holds true, our year to date Pending sales will be down 325 sales compared to the same period in 2009, despite the record breaking March and April sales. Active listings on the market, as of today, are 7022 residential listings, which is approaching record breaking, but not in a good way! As previously  reported, the effect of higher inventory is usually more pressure on pricing, as sellers anxious to move their homes try to make their home stand out in the marketplace, usually through price reductions. The inventory number I would like to see would be in the 3,000 to 4,000 unit range…more of a balanced market. We currently have a 12 month supply of homes on the market, which means it would take 12 months to sell all of the current homes we have available, if we didn’t add a single new listing to the supply during that 12 month period.

Kentucky real estate

I had the opportunity recently to hear a great sales trainer provide his insight on our current market conditions. He focused mainly on the factors that motivate today’s buyer. He was able to quantify what I’ve been telling people for quite some time…people in the market to buy today are there for specific reasons…people are no longer buying for the fun of it like they did 5 or 6 years ago. His simple formula was this: when a buyers’ current dissatisfaction with their current home along with the promise of the great things that come with getting the new home exceed their fear and cost of making the move, then they’ll make the move. The bottom line is people have to have very specific motivating factors to be in the market, and these factors are usually very personal. Things like low interest rates or seller paid closing costs are not enough to inspire people to make a change. As I meet people every week and try to understand why they’re in the market for another home, they really do have very specific needs…accommodating a growing family, a change in employment, marriage, divorce, etc.

I think September will be a key month for us. If sales make a turnaround, then I think that will indicate that we have made the turn and the Hangover is ending. If they continue in that 30-35% downward trend, then I think we’re looking at that continuing through the end of the year, and our next opportunity for a turnaround will be January 2011. Stay tuned!

The following has been updated to reflect a more accurate projected figure for August 2010:

Here is the entire July LBAR Marketing Report.

Please feel free to call or email with any additional questions you may have. My goal is always to provide accurate, professional real estate advice.