Forrest’s Blog

Remember the movie “Top Gun” with Tom Cruise?  

Maverick (Tom Cruise) is a real hot shot pilot flying in NO FEAR mode until he has a spin-out that kills his partner.  Most women will sooner remember that this is about the time Maverick “crashes and burns” in his attempts to have a relationship with Kelly McGillis.

That created a confidence problem that was difficult to overcome and he simply would not engage . . . at least until the script called for him to.  It’s fair to say that the media and all of the bad news from depressed home sales to mortgage fraud to foreclosures have created a similar confidence problem with the buying public.  Until the last few weeks very few have been willing to re-engage in the purchase of real estate.  This month’s numbers would suggest that more are engaging and closing.  Buyers may actually “Bring Back That Loving Feeling” to the Las Vegas Market once again.

There is some very positive news in the numbers this month . . . but let’s first download and take a look at:  March 2008 Resale Market Snapshot.

You can see from the attached pdf chart that the absorption rate has finally improved.  At 9% for March, that is nearly double the absorption rate of October and November 2007.  However, the market is now bi-modal, that is there is one thing going on with the properties that are selling and something quite different going on with those that aren’t.  There are now properties coming on the market “in the selling zone” that are selling in a relative short timeframe while those “out of the selling zone” are just aging in MLS without selling.  That’s why both the absorption rate and the Cumulative Days on Market are both up at the same time.  Let’s put it another way.  Approximately 25% of March closings (those in the selling zone at listing) were under 90 days on the market with an average of 57 Days on Market.  The remaining 75% suffered an average of 232 Days on Market (that’s nearly 8 months … definitely out of the selling zone).

Listing prices have now dropped over 11% in the past six months while closed sales are up over 67% since their low in December.  March closed sales represent a 38% improvement over February. Closed sales prices continue to decline bringing more buyers off the sidelines and into the market. At the same time overall inventory continues to decline. The average Cumulative Days on Market is now up around 186 days while too many listings remain woefully overpriced. 

We must remain focused on getting those critical Price Reductions! Anyone “out of the selling zone” resisting a price change should view the following video: Crazy About Our Over Priced House