Inventory Reduction Leads to 14% Drop in Sales

Westcoe Realtors, Riverside California…According to the latest November 1, 2009 MLS statistics for the Riverside area, available housing inventory remains at historically low levels, which has led to a drop in sales of 14% from the previous month of October.  As has been chronicled in this blog many times, the artificial withholding of foreclosed properties by banks from the resale market (see blog post of 10/16/2009) has finally taken a toll on the number of properties sold, as the reduced inventory has led to a drop in sales of over 14% from the previous month…and from the sales high point of March, 2009, the drop in the number of sales is almost 30%.

In raw numbers, there were 983 properties available for sale on October 1, 2009, and that number held statistically steady at 997  for November 1.  However, there were 483 properties sold in September, and that number dropped to 415 for the month of October, or 14%.  Since the demand for housing is still at an enormous pace, the reduction in the number of properties sold in October can only be attributed to the incredible reduction in  available housing inventory.  Since January 1, 2009, the amount of available properties for sale in the Riverside area has fallen from 2385 to its current level of 997…a reduction of 58%.

Closed escrows will always lag about 30-60 days behind the sales (average escrow period is approximately 45 days), and closings for September were also down as well…from 503 in August to 463 in September…a reduction of almost 8%.  Once the closing figures become available for October, it would be no surprise for them to be down as well.

The actual numbers for since June are as follows: (please note:  the following columns are equally spaced when written, but will come out crooked when posted…software “bug”…what can I say?)

Month                    Active Listings                    Sales                    Closings

June                              1332                                 519                        587

July                               1184                                 488                        520

August                          1100                                 457                        503

September                   1056                                 483                        463

October                         983                                   415                        Not Avail.

November                     997                                   Not Avail.             Not Avail.

For the next few months, should the inventory numbers remain stabilized, then all the other numbers will stabilize as well, once the time lags are accounted for.  What happens from there is any-one’s guess, as we remain committed to the fact that this market cannot begin a full and steady recovery until all the bank foreclosures are out of our system…and at the rate the banks are strategically doling them out, that could be many months away.  Only time will tell.  Until then, the real estate purchasing market place will simply have to contend with an artificially controlled market, multiple offers, overbidding, and all the other frustrations that come with purchasing a home in today’s unique real estate market.