So when are prices going to hit bottom?

By this point you've probably seen the national headlines about eh drop in first quarter real estate prices. The Charleston area is experiencing similar effects in our local market. Although the number of transactions continues to increase (up 9.9%), prices have fallen (down 4.2%) compared to the same time last year.

One of the leading indicators we use to forecast demand, and therefore price stability, is Months of Inventory (MOI). This is calculated as the number of home sales in a given month divided into the total available home for sale. Traditionally, when we see the total MOI drop to about 6 months, we know demand is increasing to the point of price stabilization. below 5 months and the market is shifting to a Sellers Market and prices can increase. Recently we have seen MOI drop from 14 months in Feb 2011 down to 8.6 for May.

to give you another reference point, we hit a high of 31 MOI in Nov 2008. That represent 2.6 years of inventory! Another way to look at this is, in a 31 MOI market, it would likely take the average home owner more than two and a half years to sell their home. So at 8.6 MOI we're not home free yet, but we've come a long way.

If you are curious about the status of your local market, ask a realtor in your area about Months of Inventory.