May is officially over, the numbers are on the books and the news is in: we’re still solidly in a down market. REALTORS across the Fox Valley are reporting rather depressing figures for May – lots of listings but few sales. Further, the word on the street from the builders is that new construction sales are still languishing. One builder was quoted as saying, “this is the worst market since the 1980’s” – a somewhat suprising comparison when you compare today’s low 6% interest rates to the 12-16% in the 1980’s. Here’s the contradiction – there were more sales in May 2007 than there have been since last July, however, the amount of inventory (unsold homes) on the market has soared to nearly a 2-year high (only topped by the inventory in April 2007). Homes are being sold, but the market is so flooded with inventory right now that we’re not seeing much reduction and prices continue to drift lower as sellers are forced to chase the market downwards.
After an early start to the “good season” in February, we seemed to hit a lull between late March and now. It’s hard to predict what the next few months will be – we’re treading on somewhat unknown ground. However, we can expect inventory to remain high as new homes continue to enter the market. If an influx of buyers hit the market running after Memorial Day, we could see some reduction and homes could start moving, but we’re still waiting for signs of that. June should be a telling month. It could be the difference between the light at the end of the tunnel and one of the slowest markets we’ve seen in a decade.