Right about now, real estate professionals start to feel the seasonal slowdown. After the bulk of sales have closed escrow and people return from summer vacation, it’s as if the industry looks up from their activities and wonders what happened to the pipeline. Questions start to emerge about whether or not the slowdown is normal or something to worry about as in years past. Weekly Listings Under Contract is a measure that is good to follow. It compares how many properties are still in escrow this week vs. previous years and allows us a view into what will *hopefully* be closing in the next 6 weeks give or take. It also gives us a head start in identifying a potential shift.
2013 saw a shift from a seller’s market to a buyer’s market in July and August. One red flag that something wasn’t going well was the number of listings under contract in week 30 was below where it was in week 1. That is atypical as week 1 is traditionally the lowest point of the year for listings under contract. 2014 was balanced for most of the year, and thus followed the typical seasonal trend. 2015 so far has seen a shift from a balanced market to a seller’s market. While there has been a downturn in the last 2.5 months, it is seasonally expected. The count is higher than it was in week 1 and the trajectory downward is not as steep as it was in 2013, therefore it’s not an alarming development at this time.
While the number of listings under contract is lower than 2011-2013, when we look at the same measure by price range it’s a different story. 2015 has hit a 5-year high for listings under contract over $200,000 and a 5-year low for listings under contract under $200,000. The lack of inventory under $200,000 for consumers to buy is allowing the upper price ranges to gain market share. Since these properties are still in escrow waiting to close, it gives us a peek at what overall sales price trends will do going forward. At this rate, we can expect annual appreciation to stay positive over the next few months.