Prices Near Record Highs Again, Sales… Not So Much

It was a year of strife, acrimony, a huge stock market run-up, continued wage and GDP stagnation, and a general atmosphere of toxic uncertainty.
So how did Summit County do in 2016?  Surprisingly, pretty well.
Sales fell short of last year’s but prices increased moderately.  Pretty much everything that was listed was sold and usually very quickly.
The historically low inventory helped to create a somewhat false sense of urgency.  That probably spurred some buyers to act who might not have if there had been a normal number of properties to choose from.  Same goes for the threat of higher interest rates.sales v price
But the year ended with the sound of crickets that started with the election results.  Buyer and seller activity just stopped.  I’ve never seen that in 30 years, but I’ve been saying that a lot this year.
Here’s the details.
On January 1, there were a total of 587 properties for sale in Summit County.  271 of these were vacant land and commercial.  316 of these were residential properties.   157 of those residences were priced under $1 million.  96 of those had been for sale for 90 days or less, the majority for 30 days or less.
For perspective on this, 1659 residences sold in Summit County in 2016 for $1 million or less.  On January 1 there was about a 1 month supply of these properties.  No wonder they are selling so fast.
Residences priced over $1 million numbered 160, 80 had been offered for 180 days or more.  Several, and not the most expensive at that, had been on the market for over a thousand days.
228 residences listed for $1 million or more sold in 2016. There was an eight and a half month supply, the only over supplied segment of our market.
2096 properties of all types sold through the Summit Association of Realtors MLS  in 2016, about four percent fewer than in 2015.  The average sale price increased by 4.8%, however.
So what does it all mean?  Here’s a fun fact:
Prices have increased while volume declined three previous times in Summit County: in 1995, 2001, and 2007.  The first two events were followed by three years before volume regained it’s previous high.
In 2008, prices reached their all time high while volume dropped to half of its all time high reached just two years before.
Prices are a lagging indicator, they continue to increase even as volume falls off.Avg. Price Change by Year
Our market has still not recovered from the 2007/08 event to the previous high of nearly 3000 sales.  So the market has leveled off at a lower level of sales while prices continue to increase.  Whether this is a plateau that we stay on for some time or the start of a decline, we have probably seen the near-term high for volume.
Barring a major economic meltdown such as the Lehman Brothers bankruptcy, these events last for about 3 years and usually don’t bring major price drops.  In fact prices only took a year to regain the previous high in the ’94 and ’00 events.  Even in the Bush Depression prices declined for only 3 years and returned to beat the previous, all time, high in 2016.
It appears that our market is heading for a plateau period with not much change in volume or price for one to two years.  As to inventory, who knows?  Until sellers see which way this market is going to jump, they will probably continue to sit on their hands.  But when they finally decide to act, look for  plenty of property on the market.
It takes a lot to injure this market.  With the demise of “liar loans” and sub prime mortgage speculators, buyers routinely put significant money down at closing and must be much better qualified than perhaps ever before.  This takes a lot of the downside risk out of our market.  That may be why nobody is selling.  Summit County real estate looks like the safest place to put your money in an uncertain environment.

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