February

It is true, some houses are selling. Some people are buying. In fact, more than in January. Some people seem to think that this heralds the end of the troubles.

I don't think so.

Look at KopyrightKlepto's projections taken from PaulB's daily numbers:

Projection from 23-Feb-2009 : 16 of 20 days Complete

Listings: 4016 (-24% yoy) (+9% mom)
Sales: 1505 (-44% yoy) (+98% mom)
Sell/List: 37% (-13 pp yoy) (+17 pp mom)
MOI: 10.4 (+143% yoy) (-47% mom)
Actives: 15,620 (+37% yoy) (+4% mom)

Sales in February are on pace for a 44% drop from 2008. But you must remember that 2008 was not a good February--the slowdown had already started. Here are the February numbers from the past few years, all taken from the REBGV releases:

Year Sales Listings sell/list
2009 1505 4016 37% (projected)
2008 2676 5260 50.9%
2007 2859 4167 68.6%
2006 2941 4340 67.8%
2005 3068 4055 75.7%

So, we'll be off roughly 50% from a typical 'good' February, in terms of sales.

What about prices? We saw an uptick on benchmark prices in January. Was this the start of a big upward bounce or a seasonal effect?

Here is a graph of the montly average price increase (MoM) from 2004-2008.

(Note: This graph is not endorsed by the REBGV.)

February was the month with the highest average month-over-month increase in the REBGV benchmark price for detached houses.

I think this is because of the seasonal patterns of RE. February is not the month many people get desperate and lower their price to sell. In February, dreams of the 'spring selling season' dance in sellers' heads. Maybe the buyers will come! It is at the end of the 'spring selling season' that reality starts to hit. People either cut prices or pull listings and wait till next year.

If you are thinking about buying at some point, what month would make the most sense? Well, in a market that is trending down, it seems like the best deals are likely to be had in the summer, when those who listed with optimism in the spring are starting to think about the reality of going unsold. Were I a buyer, I'd be ready with my lowball offers in a July or better yet a November, not a February. (And, it goes without saying, not in 2009!!!)