Supply &
Demand Update for the Lehigh Valley March 2012
February recap- My conclusion for the month of February was
the housing market moved supply at an incredible rate, an increase of 58% year
over year. Simultaneously, the metrics that take into consideration the whole
time period were not impressive. Therefore,
March’s monthly metrics will reveal which theme has more momentum; 1, the
compelling increase in Under Contract homes; or 2, the dreary full time period
metrics. Lastly, the Spring Season may have simply just started earlier because
of nicer weather in February, it is a theme to keep in mind throughout the
coming months.
Reaction: Prices over the whole time period are down -4.7%.
This metric tells the story of the past, but not of the future. The full time
period metrics support the price decrease, what I am interested in is if the
year over year metrics will continue to progress.
March 2011:
$154,900 – March 2012 $159,585 – (+3%)
Reaction: I do not put a lot of stock in this metric as it
has too many variables that fluctuate in a month to month comparison. However,
it is certainly not a negative that the month to month comparison showed some
growth.
Chart 3:
Supply & Demand yearly chart:
For Sale
homes: -5.6% Under Contract: +10.6% Sold
Homes: -19.3%
Reaction: The continuing theme for the Lehigh Valley is that
homes are going Under Contract at a compelling and positive rate, +10.6%. At
the very same time, there was a -19.3% decrease in Sold homes. Unequivocally,
the reason prices are down over the past year is the lack of settlements. The
effect of the Sold metric has been somewhat offset by the decrease in the
amount of homes For Sale and homes going Under Contract.
For Sale
homes: +9.7% (4702) Under Contract
homes: +49.9% (712) Sold homes: +3.1%
(401)
Reaction: Just like last month, the Under Contract metric is
up a staggering amount, close to 50% in March. March is typically the beginning
of the Spring market, so unlike last month, good weather is not a good enough
excuse for the huge increase in homes going Under Contract. However, the amount
of For Sale homes this year is up +9.7% compared to last. What this means is
that as inventory clears there are still people waiting to sell their homes.
Chart 5:
Month’s Supply of Inventory full year:
-9.9%
Reaction: Supply is decreasing and that is excellent. We need
to supply to reach the point where if the market stopped adding homes, there
would be no more homes to sell after 4-6 months. See more commentary about the MSI
number below.
March 2011: MSI=7.4 March 2012:
MSI=5.1 -31% decline in MSI
Reaction: For the month of March 2012, the Lehigh Valley was
in a neutral market. A neutral market is
a good thing. If this trend continues, prices will climb. There is tremendous
momentum being obtained by the housing market. Hopefully it continues!
by Stephen Weinstein PA License # RS316695
