By Chuck Fister, REALTOR
Special to The Citizen

In a May 9, 2007 article published in The Citizen, I reported that Single Family listings under contract as of May 1 gave sellers some hope that the Fayette County real estate market might be rebounding. Sales metrics for April showed that sales had improved by about 10% over the previous six-month average. Those observations were tempered by the fact that sales performance prior to April was poor, with about 114 total sales per month on average. Although the market did rebound, listings sold peaked in June and have fallen dramatically since then.

With the second and third calendar quarters ending Sept. 30 now over, the purpose of this article is twofold. The first purpose is to recap the performance of Fayette County Single Family listings over those two quarters. The second purpose is to relate October sales and November 1 listing metrics to the quarterly performance. Listings available for sale as of November 1 totaled 1,549. This is the total of active listings plus listings under contract (which are considered available for sale until they close in a sale transaction). Total listings peaked on my June 1st report at 1,752. November 1 total listings have fallen from the June 1st high by a factor of 11.6%.

Listings under contract as of November 1 totaled 129, which is well below the April 1 metric of 213. Under-contract listings also include those contracts that are contingent upon the sale of a buyer’s house, but are subject to a “kick-out” clause. Under-contract listings peaked on June 1 at 249. November 1 under contract listings varied from the June 1st high by a factor of 48.2%.

The latest month for which sales data is available is October 2007. This sales data shows that there were 111 sold listings in October, falling below the 114 monthly average of the October 2006 to March 2007 period. The best sales month of the two-quarter study period was June, with 204 listings sold. October sold listings varied from the June high by a factor of 45.6%. “Absorption Rate” is a measurement of the percentage of total listings that are sold. The rate is derived by dividing the total listings available on the first day of a month by the listings sold during the entire month. The month with the highest absorption rate was June at 11.6%. In contrast, October had an absorption rate of 7.0%; a variance from June of 40.2%.

The “Sold Success Rate” was the subject of my September 12, 2007 article published in The Citizen in which I discussed strategies to avoid sales agreement failure. Simply stated, the Sold Success Rate is the percentage of listings that are under contract on the 1st day of the month that close in a sale by the last day of the same month. Because closings are subject to various timing and situational vagaries, the closing rates vary widely from month to month. However, it is useful to review average closing rates because averaging smoothes out the irregularities found in month-to-month comparisons.

For the two-quarter study period, on average, under-contract listings priced less than $200,000 successfully closed in a sale at a Sold Success Rate of 92%. Listings priced between $200,000 and $300,000 closed at an average rate of 82%. Listings priced between $300,000 and $400,000 closed at an average rate of 71%. Listings priced between $400,000 and $500,000 closed at an average rate of 64%. Listings priced above $500,000 closed at an average rate of 44%.

Since the closing ratio measures success, the inverse of the closing ratio measures failure. In other words, for the two-quarter study period, on average 56% of under-contract listings priced above $500,000 failed to close and result in a sale. Similarly, 36% of under-contract listings priced between $400,000 and $500,000 failed to sell. 29% of under-contract listing priced between $300,000 and $400,000 failed to sell. 18% of under-contract listings priced between $200,000 and $300,000 failed to sell. Only 8% of under-contract listings priced less than $200,000 failed to sell.

One of the most important metrics I track answers the question: “How long will it take for my house to sell?” These metrics measure the months of inventory of total listings currently on the market. For this report I compiled a weighted-average months-of-inventory.

I equally weighted the following projections: (1) average months of inventory based on sales data for the two quarter study period, (2) months of inventory based on the most recent sales month (October), and (3) months of inventory based on projected sales for November.

Although this is a highly subjective analysis, the underlying metrics all point to an increase in inventory for the upcoming months, if total listings remain near their current level and sales continue to fall.

For the two-quarter study period, there was an average inventory of 12 months of total listings (includes all price ranges). The best overall month for seller expectations was July at 10 months of inventory. Contrast that to November 1st. There are now 13 months of total listings inventory on the market; a 30% increase in the expected sales period over the July factor.
The expected time on market varies, depending on listing price range. As of November 1st there was a weighted-average of eight months inventory of unsold listings priced less than $200,000. Similarly, there was an 11-month inventory of unsold listings priced between $200,000 and $300,000. Listings priced between $300,000 and $400,000 have a 13-month inventory of unsold listings. Listings priced between $400,000 and $500,000 have a 20-month inventory of unsold listings. Listings priced above $500,000 have a 35-month inventory of unsold listings.

If you have any questions or comments about this article or would like a copy of my data analysis and listing performance evaluations for Fayette County, Coweta County, Clayton County or Henry County, please call or email me. If you need specific market information, please call and I will attempt to accommodate you. All of my articles are available on request.

Chuck Fister, REALTOR
Direct: (678) 587-3425
E-mail to: chuck.fister@metrobrokers.com
Chuck Fister is a REALTOR, real estate consultant and sales agent with Metro Brokers/GMAC Real Estate and works out of their Peachtree City Office.

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