This month we’re reporting statistics a little differently. They’re based on the number of contracts written rather than the number of closings. Why? Because it’s fun to shake things up every now and then. And because I honestly think it’s a more relevant way to look at the market.
By focusing on contracts, we get the most up-to-date view of market activity possible. The contract date is when deals are struck, when prices are negotiated, and when homes go off the market. That’s where the action is. Buyers should care about contracts because it will give them a sense of the activity level of their competition for homes. If there is a lot of buyer activity, then they may need to be more aggressive. Sellers should care about contracts because it shows when the buyers are active. If there’s a lot of activity, and their home isn’t selling, then it might be time to take some action.
What we lose by shifting the focus away from closings is information about the final sales price. We can’t report on changes in median sales prices since that figure doesn’t become public information until the closing. But is the final sales price that important? It is in individual deals, and when finding comparable sales for a specific property, but I have not been impressed with its relevance when looking at entire towns. We’ve been tracking and reporting on closings for years. Over that time I’ve noticed that the median (or average) sales price bounces around from month to month. Looking deeper into the data, it’s almost always because the mix of homes that sell is different each period. Every comparison is apples to oranges. Using longer time periods (quarters instead of months) helps smooth out some of the randomness, but it doesn’t completely go away.
Reporting on contracts makes more sense to me, but I’ll be curious to hear other opinions. We’ll definitely continue to look at the pricing trends, because they are both important and interesting. However, high level stats for an entire town on a monthly basis doesn’t seem like the best approach.
With that, here is some data about contracts written in Hartford County this past month.
Home buyers were more active this November than last November, with an 11% increase in the number of deals. The differences between towns are considerable, with some showing a big increase and others with many fewer deals. November is traditionally one of the slower months for real estate deals because buyers begin to wind down for the winter. The past two years have been a little different than usual due to the various tax credits. The number of contracts by month is shown below for 2009 and 2010, which can be contrasted to a more typical seasonal pattern that we published late last month.
Although the number of November deals is up versus last year, there has also been an increase in the days on market for the homes that did go under contract. Inventory, as measured using contracts written over the past 12 months and current listings, stands at just over 7 months. This means that there is a slight buyer’s market for the County overall, though that too varies by town.
NOTE: As always, the data used comes from the CTMLS and is deemed reliable, but not guaranteed.