Housing inventory better but not good
A look at home inventory numbers
Date published: 7/24/2008
BY BILL FREEHLING
There are still many more houses available in the Fredericksburg area than people buying them, but the imbalance has improved every month this year.
There was a 10-month supply of houses actively listed on the market in the Fredericksburg area at the end of June, according to data from Metropolitan Regional Information Systems Inc.
That's still nearly double what officials from state and national Realtors associations consider to be a good balance between supply and demand. But it's a far cry from the 20-month inventory that existed in the local market this past January.
Those figures are calculated by dividing the number of houses listed at the end of the month by the number of sales. At the end of June, for example, 3,673 homes were listed in the Fredericksburg area, and 350 sold that month. At that pace of sales, it would take 10 months to clear the inventory.
Lisa Noon, a spokeswoman for the Virginia Association of Realtors, points out that the definition of a "healthy" ratio differs across the country. Walter Molony of the National Association of Realtors notes that sales rates should be adjusted seasonally, because sales fluctuate depending on the time of year.
Both agree that a six-month supply of houses is roughly normal. John McClain, deputy director of the Center for Regional Analysis at George Mason University, says a housing supply of between five and seven months was about normal before the market took off this decade.
The Fredericksburg area--which includes the city and the counties of Spotsylvania, Caroline, Stafford and King George--hasn't been at that "normal" level since the beginning of 2006, according to a review of MRIS data.
The inventory-to-sales ratio was at about 6 at the beginning of the decade before steadily decreasing as the market, fueled by low interest rates and easy credit, took off. The ratio stayed below 2 between March 2004 and June 2005.
Total dollar sales volume in the Fredericksburg area was $341 million in June 2005, a whopping 24.2 percent higher than any other month this decade. Although median prices peaked a year later at nearly $350,000, in terms of sales and inventory levels June 2005 can be considered the peak of the local housing boom.
| Housing inventory levels
The ratio of homes listed to homes sold has dropped every month this year in the Fredericksburg area, but remains higher than in previous years. A ratio of 10.5 indicates that it would take 10.5 months to clear the current inventory if no other homes came on the market. Here are the ratios for each June this decade:
June 2008: 10.5
June 2007: 10.1
June 2006: 7.9
June 2005: 1.3
June 2004: 1.2
June 2003: 1.6
June 2002: 1.5
June 2001: 2.1
June 2000: 3.2
--Metropolitan Regional Information Systems Inc. |
Here are the ratios of homes listed to homes sold this past June in Fredericksburg-area localities. The lower the ratio, the less the imbalance between supply and demand. This number represents how many months it would take to clear out the existing inventory at the current sales pace.
INVENTORY LEVELS BY LOCALITY
Orange:
27.6
King George:
24.1
Westmoreland:
24.1
Caroline:
23.1
Culpeper:
12.8
Fredericksburg:
11.9
Fauquier:
11.2
Spotsylvania:
9.5
Stafford:
8.6
--Metropolitan Regional Information Systems Inc. |
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Date published: 7/24/2008
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