We love the holidays as much as anyone, but a little less red in the chart would be nice too.

Belmont home sales for November of 2010 continued the trend of the last two quarters with fewer sales and declining home values as compared to the same period in 2009. 

November 2010

(Click on the chart to see a full-sized image)

Clearly consumer confidence is woefully short of normal. While consumer confidence does not in and of itself control the direction of the economy it does reflect consumer sentiment. Consumer sentiment is well represented by consumer spending—when consumers are comfortable with their view of the future they tend to spend more. Considering that some estimate consumer spending to represent 2/3rds of our nation’s domestic product (GDP) suffice to say that consumer confidence is necessary for a sustained recovery. For consumer confidence to rebound there needs to be more jobs and of course the feeling that the job one has won’t go away soon either. On a positive note the consumer confidence index rose to 54.1 in November from a revised 49.9 in October. It was the highest level in five months. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.

How does this affect the housing market? The tenuous job market is taking its toll on nervous home buyers. Buyers are still purchasing homes but fewer can qualify for a loan and when they do it’s usually for less home than before. Those who are willing to purchase a home seem to want only exceptional deals—building into their offer price a buffer against further price declines.


Home sales in Belmont remained fairly strong considering the aporetic feelings among buyers.

This November we saw 16 homes trade hands in Belmont as compared to 22 in 2009.

Of the 16 sales, six sold for on average $21,350 more than the seller’s asking price in 17 days, one sold at the asking price, and nine sold for on average $16,500 less and took 82 days to sell.

Six sellers also reduced the price they were originally asking  for their home by on average by $149,342, while last year there were only three homes which had price reductions during the same period and for on average only $13,590.


The median price (on paper) went up 5.4% to $843,475 from November 2009 when it was $800,000. However, in 2009 the median size home which sold was only 1,558 square feet as compared to this November when the median size home sold was 1,920 square feet—a difference of 352 square feet. At the median price per square foot that homes sold for during November, $466 and the difference in the size home sold, 352 sq. ft. one could make an argument that if all things were equal (the same size home selling in the two periods) the adjusted price for 2009 would be closer to $964,032 ((352 Sq. Ft. x $466 per sq. ft. = $164,032) + $800,000) =$964,032. This allows us to estimate that home values dropped around 12.5% year over year in the month of November. How much the median price changed for the year as a whole is yet to be determined. Remember, just because homes dropped 12.5% in the month of November, earlier increases in the year can mean at year's end the median price could be up for down from the previous year.

It’s also interesting to note that although the median size home which sold in November of 2010 was much larger, only one home sold over the one million dollar mark as compared to three in 2009.



Not surprisingly it took more time to sell a home this year than last–on average 62 days—up dramatically from 38.5 days in November of 2009. One also must be cognizant that last November the first-time buyer tax credit was in effect which skewed the numbers in favor of more sales, selling faster, and for more.

When home values are dropping, the time it takes to sell a home typically increases as sellers often price their home based on recent past sales. But when home values are falling, recent sales were worth more. Eventually most sellers get the idea that they must get ahead of the pricing curve and lower their home more than the market suggests it might be worth. This has an ancillary effect of lowering home values rapidly and perhaps more than they would otherwise drop.

Noting the huge difference in not only the number of homes which had price reductions, but the steep adjustments that were made, illustrates the difficulty in pricing a home in a declining market and underscores the importance of introducing your home to the market at the right price.


There’s always some danger in looking at a small market sample such as Belmont with only 16 sales in a given month. Seasonal factors play heavily in the statistics which is why we choose to compare each month we examine to the same month a year before. However, it’s important to note that other factors can effect comparing these two periods. For example, last November the first-time buyer tax credit was expiring, causing many buyers to rush to the bargaining table. This increased competition for homes undoubtedly buoying the prices while increasing sales.

Our leading indicators of future market conditions indicate a gradual recovery in the housing sector.

  • The Institute for Supply Management reported that the monthly composite index of manufacturing activity fell slightly to 56.6 in November after reaching 56.9 in October. A reading above 50 signals expansion. It was the 16th straight month of expansion.
  • Total construction spending rose 0.7% to $802.3 billion in October, following a revised 0.7% increase in September. Economists had anticipated a drop of 0.4% in October.
  • The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 10.4% in October after a 1.8% decrease in September.
  • The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity rose to 55 in November from 54.3 in October. A reading above 50 signals expansion. It was the 11th straight month of expansion.

On a local level our professional staging company has reported to us that their orders for staged homes are booking up fast for January, indicating that Sellers are interested in getting a jump on the spring market.

If you are considering selling your home next year you may want to consider doing it sooner rather than later before inventory rises to levels which make price reductions necessary to attract Buyers.

If you are considering selling your current home and/or purchasing a new one be sure and contact us for your real estate needs.

Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 





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