There’s a good chance we will have the worst February ever when it comes to homes sold in Central Ohio.
Is the housing market crashing again?
Did another real estate bubble burst?
None of the above. As a matter of fact there are plenty of buyers looking for homes. I have experienced this first hand. Two of my listings that did not have any activity for almost 5 months, all of a sudden had multiple showing this week.
Why Do I Predict A Drop In Sales?
When the Columbus Realtors published their monthly housing statistics earlier this week, one number caught into my eye. It appears that nobody else has been paying any attention to it.
I am talking about Pending Contracts.
That’s the number of purchase contracts signed during a month. These contracts should close in the next 30 to 45 days, but only 75% to 80% will actually close. Pending contracts are a good indicator of home sales in the coming month.
In the chart comparing pending contracts to closed sales you can see that the blue curve (closed sales) is shifted to the right by approximately 1 month.
Problem is, pending contract dropped by 51% in January as compared to a year ago. As you can see in the chart at the top of this post, the number of pending contracts (red line) is now lower than the number of homes sold (blue line) in January 2014.
That’s certainly not a good sign for what’s to come. And pundits will be all over it by March 20th, when February data are bing published.
How Low Will February Home Sales Go?
Based on the fact that only 80% of pending contracts close, February home sales could be as low as 914. This would be a devastating record. For comparison, 1,452 homes closed in February 2013.
I checked the MLS to see how many transactions already closed as of today and projected closings for the remaining days of February 2014. Based on this estimate we should close approximately 1,050 homes in February 2014.
This is probably the lowest number of closed February sales ever! And it is 28% less than a year ago.
What’s the Reason for the Drop in Sales?
The main reason why February will be considered a disaster by many is the weather. With the snow covering most of Columbus, home buyers simply did not feel like house hunting in the chilly winter months.
The situation is worse because of our record low inventory. As of January 2014 only 8,284 homes were listed for sale on the Columbus MLS. This is 50% less than 5 years ago and 7.3% less than last January.
Home owners clearly did not feel like moving during the cold winter months either.
Here’s The Good News …
Now that temperatures start to rise and the snow has melted, I expect a mad rush of buyers swooping up everything that’s for sale.
Home values have increased every month for the past 2 years. In Columbus values are up by 8% from a year ago and will continue to rise.
For anyone planning to sell, March is the perfect time to put your house on the market. But plan on moving quickly, because you may get multiple offers within a few days.
Susanne Novak has been a Realtor since 2007. She is the broker and owner of RE/MAX 24/7 in the Dublin Historic District. Susanne typically helps 50-60 families each year with their real estate needs. She's your trusted advisor when you search for your dream home, and a skilled negotiator when she lists your property to get top dollar when you sell.