September is a transition time for almost everybody. Here in Westport, the kids have shifted into school gear, adults have moved out of vacation mode, and businesses are already sprucing up for the (believe it or not) Holiday Season.
In real estate, we are looking with more than casual interest at what’s going on nationally. Especially those measures that tend to affect home sales in Westport . The largest professional association in the country is our own National Association of Realtors®. At the beginning of September, they broke another piece of welcome news. This one looks like the difference between ‘indicators’ of a strengthening home sales market -- and signs that it’s already fact.
The NAR release was about TOM. No, as you may have guessed, TOM isn’t some real estate broker’s name -- it’s the Time On Market measure. For Westport and Fairfield homeowners who are selling (or planning to sell) their properties, it’s a vital measurement of one of the two most important characteristics of how things are going – a tip to what they may expect when they list. Along with median price trends, it tells the story of whether the market is hot, cool, or somewhere in between.
For some years now, TOM has been an uncooperative sort of fellow, at least when it came to home sales here in Westport and Fairfield. Following the financial crisis came skyrocketing foreclosures…then the fallout from that -- painfully long TOMs marking the lengthening time it took to move homes through the market. TOM had stretched out to a painfully long median of 98 days – close to the longest ever.
The good news: TOM is just about back to normal. From the cyclical peak hit in 2009, by mid-summer, he was back “in the range of historic norms for a balanced market.” Traditional sellers were reporting the median TOM had returned to the balanced range of six to seven weeks. NOW, TOM is finally behaving himself.
And what about that other half of the picture that helps guide home sales expectations?
I think it’s too soon to tell for sure, but the head economist at NAR knows what history tells us to expect when this kind of balanced market returns. According to him (Lawrence Yun), “Our current forecast is for the median existing home price to rise 4.5% to 5% this year.” Plus another 5% in 2013!
So the transition that September means for everyone else seems to be underway in the real estate world: and it’s a transition back to home sales normalcy. In light of what we were looking at a just couple of years ago, I think it’s fair to say we are delighted that ‘normal’ is the ‘new normal!’