It’s been a long time since we’ve seen such a ubiquitous term as “the snowbird effect”. That mild reference to winter is a new phenomenon and can cause seasonal effects in many climates. Those slight seasonal changes are not always accompanied by dramatic swings in the value of single family homes. If we look at the past 20 years, we see a clear pattern of sibling des translations demonstrating this point. 2000 just had about an 80% gain in volume, but since 2000 we have only had a 20% gain in volume in the nation. The declines were variable and even in different years there were some years of very strong appreciation. By comparison, the past 5 years are the same thing, with a small gain, a middle of the road gain, and very little appreciation. What if we had a great period from 2000 through 2007 and we had the same type of appreciation? Is it too late to get into real estate in 2008?
There is a summer sale and a winter sale, a summer bounce and a winter fall. The trends are the same, only the timing is different. One of the main categories of housing was the flat or declining category. During the summer, we have that very occasional decade of low appreciation that goes into a smooth rise and fall. If this gas is not there, there are ups and downs in population prices, but the large swings are more predictable. This year for the first time ever, the summer sales pace was higher than 5% of the previous year’s. These two data points show a dramatic difference in the overall trend.
What if that same summer spike occurred in 2008, from the population data? The summer sales pace would be 2.5% greater than the year before, and we would see a 3% gain from the previous year. The best part of all of this, the current population growth numbers would be at 9% which is still respectable, but moredruted. If we had the summer sales spike in 2000, we would have 1% less homes in escrow in ’99 compared to ’08 because of the big run up in population in ’98. The ’99 data pruning that we did in ’00 would go down by 12.4% (4.2% from ’08), instead of staying at a 9% rate (2.8% from ’99). With that says, with the stable population growth, the ’07 through ’10 gains would look a whole lot better. This year we could have a 2.1% rate of growth, very close to the 2000 level. This year the population growth is also over 1.1%, so much for big run up in 2000. Why do we forget the summer sales? Let’s dig into the data a bit further.
Median prices in the Lake County market are starting off at $100,500, a very affordable price for a very nice home in this very nice location! The DataQuick report shows that 5 sales (35% of the time) in the 1st 3 weeks would bring $10,000+ gain, but the most expensive sale in the neighborhood ($100,000) would only change hands 10 times in the first 3 weeks and that only by $40. This small time span results in almost no appreciation % regardless of the seemingly excessive number of high dollar sales in the first few weeks. Is it too late? I say yes!
Let’s paint the picture a bit brighter for this summer and try to look at the average number of homes sold in April and May..In April 5 houses sold in Lake County, and in May 15, which is the current average. While this may not seem like much, these numbers in relative terms can look very impressive. A 1.5% increase in the number of sales in April but a 16.5% increase in May is a 29% increase in the percentage of sales. Comparatively, the median sale price from April to May is up a mere $100 to $100, which is still very good. At the current sales pace, it will take over 67 months for all of the current inventory of homes in the Lake County market to be sold with a sales price of $100,000. If this in fact happens, this will make the most current homes available for sale in our market. (Lake County MLS Board data)
How about the Days on the Market? Let’s not put too fine a point on it, but I will do my best to convey the point for those who may not be familiar..In April, the average days homes were on the market was 77 days, which is just 7 days less than the year before. This is about the equivalent of saying home sales increased by $1,200%. For homes not sold, the 5 most expensive sales since January and 2003 were on the market for 73 days each.