Savannah housing market showing improvement in year-over-year sales; long recovery still ahead

There literally isn’t anything in the latest Savannah area MLS data that jumps out at me. (The numbers are typically available on the 9th of each month but I’m just now looking closely at them.)

The total number of sales continues to show some year-over-year gains, but remains well below the numbers we’d expect in a healthier economy.

A few specifics:

Check out this chart of total sales over the last three years:

It’s actually quite tricky to establish valid year-over-year comparisons on this chart because of the various deadlines of those wasteful homebuyer tax credits, which did nothing but delay the inevitable reckoning and lure too many people into the market too early. Look at Nov. 2009, when lots of buyers were trying to beat a deadline, compared to Nov. 2010. Sales in April through June 2010 were buoyed by the tax credit too, although the gross number of sales was pretty disappointing.

We’re now back to the regular seasonal pattern, however, and the numbers year-to-date would suggest something like the following for the rest of 2011: 355 in August, 340 in September, 325 in October, 280 in November, 275 in December. We’ll see how I do with those predictions.

Keep in mind, however, that these are all weak years. We should be seeing something close to an average of 500 residential sales per month to match historical trends of relatively healthy markets. So we’re 30-40% below the optimal levels of sales.

Other points worth noting:

  • We have 11.4 months of inventory currently on the market, at the July pace of sales. That’s about 2 months more than the national average and about twice what we’d expect historically.
  • More expensive areas have more months of inventory, while more middle-class areas have fewer months. No area could be describe as having a “healthy” level of inventory, however.
  • We’ve seen steady declines in the number of new listings in year-over-year comparisons. That will help support prices by limiting the amount of inventory available for buyers at any given moment, but the sheer level of inventory also puts downward pressure on prices.
  • Even as interest rates go down even more, the recent declines in stocks and growing fears regarding the world economy might keep some buyers on the sidelines.
  • Sales of vacant lots (89 months of inventory), commercial properties (135 months of inventory), and multi-family properties (29 months of inventory) remain seriously depressed.
  • We will see lower prices this fall and winter — a typical seasonal trend that will be reinforced by all the ongoing problems.