Drawing attention to this, Tony Clarke, Managing Director of the Rawson Property Group, says that on the figures given by the NAR, there can be no doubt that this is happening.
“The market is increasingly less flooded with low price stock. The number of homes listed for sale in January 2013 (1.74 million) was 4.9% lower than December and was the lowest total since December 1999, when there were only 1.71 million homes for sale.
“Just how significant this drop is can be seen when it is compared to the January 2011 figure when there were 2.9 million homes on the market. The improvement is, by any standards, very significant – and to be welcomed.”
US economists, say Clarke, are now predicting that in 2013, a total of 5.2 million homes will be sold in the United States.
Another way of looking at the situation, he said, is to compare hypothetical stock elimination times: supposing no further homes were to come onto the market, the current stock, at today’s sales rate, would sell within 4.2 months. This, too, shows a big improvement on the same month last year, when it would have taken 6.2 months to sell the stock.
For the record, in ‘desirable’ areas, US homes are now selling in 65 days, on average, while those in remote or less popular areas are taking 300 days to sell. The average sales time is now around 155 days, which, says Clarke, is better than the South African figure.
“The latest upswing in the US has been partially attributed to the arrival of spring, when homes always sell faster. However, that, I believe, can be over-emphasized – it certainly cannot account for so big an improvement on its own. The simple truth is that a growing number of buyers are now chasing a dwindling number of homes.”
This must impact on prices – and it is noteworthy that the latest NAR figures show that these are now rising year-on-year at a rate of 7.5% or 0.9% per month. (This figure excludes foreclosures and short sales.)
Recovery in the home market, says Clarke, is, however, likely to be partially held back by the very large number of repossessed homes now owned by the USA’s banks. These, he says, have become the country’s largest owners of residential property in the last four years. They will, however, now be forced to release these properties onto the market and the temptation will be to discount prices so as to get rid of stock. This will inevitably affect the market as a whole.
Relating the US figures to those of the Rawson Property Group’s, Clarke says that the sales trends here are similar and, as in the USA, a steady improvement is now discernible. The big difference between the South African situation and that of the USA, is that our banks are fortunate to have already disposed of most of their repossessed stock.
“There is, therefore, no longer any danger of the banks flooding the market with low priced homes which have to be sold fast – and for this we can be grateful.”
