Current Sales Determines The Future Price

Bill Hitchcock

Current Sales Determines The Future Price
By: Bill Hitchcock

There is a direct correlation between the number of properties sold and the average sold price of those properties. As sales increase, prices increase. The inverse also holds true. As sales decline, prices decline.

But price doesn’t follow sales, it lags behind sales. In a typical market place such as on and around the Neuse River, The lag time between sales and price is about a year. Take a look at the two charts below. They are graphical displays of lot/land sales and price from the Neuse River area.

00_09Sold

(Information derived from the Neuse River Association of Realtors MLS. 2009 results cover Jan 1 thru July 31)

00_09Price

Rising Prices: Notice how prices rose higher the year following a rise in sales? The peak year for number of lots sold was 2005. The peak year for the highest average sold price was 2006.

Falling Prices: The graphs above show that the most expensive time to buy land in the Neuse River area was when sales were approximately half of what they were during the peak. As each year sales declined-The proceeding year showed a corresponding decline in price.

What does all of this mean?
As of July 31, 2009 there were a total of 101 lot/land sales in the Neuse River area. To find sales that low during the same time period (Jan-July) you would have to go back to 2001. There were only 99 sales by the end of July that year. Prices reflect these reduced sales. Currently average sold prices are at a 5 year low. Are we at the bottom? My guess is yes. Now is the time to be looking very closely in the Neuse River River area for land purchases.

The Secret
Too many people miss great buys because they don’t understand that great buys are individual, specific opportunities. Too many people tend to think of real estate universally. Each market place has its own averages and trends. And it certainly makes sense to buy when average prices are low such as they are now. But it’s the specific opportunities that are scattered about that blow averages away that you need to look for.

They are out there. The smart buyer and investor is looking right now for these specific opportunities.

Now is the time to be buying land in the Neuse River area. It’s a safe assumption to say that with the 2001 level of sales we are currently experiencing that price is not going up any time soon. Mortgage/lending rates might be, but not price. In my opinion-I do not think that sales in this market place will be falling any more. In my opinion there are just too many bargained priced properties in the Neuse River area that will be bought by someone for sales to drop any lower.

Are you going to take advantage of the opportunity?

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Author’s Yougler Profile is at  Bill Hitchcock.

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