Destin Foreclosures, priced at market value, are leading the way in reducing the number of available homes for sale in the area.
Many buyers are anxiously looking at recent selling prices in an attempt to "guess" the market bottom. However, the first sign of a strenghtening Destin real estate market is found by analyzing inventory trends*.
As demand fell for Destin homes in 2005, 2006, and 2007 (see chart below), inventory rose dramatically. The primary reason for this was unrealistic sellers overpricing their homes. Buyers were looking but unwilling to pay the list price.
In late 2007, REO managers started listing foreclosures in Destin. Often times, their list prices were more than 30% below competing homes. Over time, traditional sellers had to adapt and began to lower their list prices in order to compete with the foreclosures.
As a result, homes in Destin have started moving again. We are now seeing many sellers listing homes at "market value" and have a good mix of both traditional and foreclosure sales.
The reduction in inventory has not yet resulted in measureable appreciation of homes in Destin. However, we have seen the selection and quality of homes available in all price ranges diminish in the past 12 months.
We still have 22 months of inventory on hand. What do you think will happen to prices as that number continues to decline?
*The best measure for analyzing inventory is ....Months of Inventory on Hand. This measure represents the number of homes that are currently available for sale in a given area divided by the number of homes that are selling each month. For example, if there are 100 homes for sale and 10 sell each month, the inventory on hand would be 10 months.
Posted by Tim Shepard - Broker on
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