If you ask most people, you'll be told that starter homes are a much more stable segment of our market right now --- and that the higher end market is definitely doing much more poorly.

As it turns out, both markets are performing well, depending on how we examine the issue.

Starter homes are performing well!



As you can see in the chart above, there is a much healthier supply of homes below $200,000 than in any other price range.  Put a few other ways:

• It would take 10 months for all homes currently on the market under $200,000 to sell, as opposed to the 24 months it would take for homes priced above $400,000.
• Each month 1 in 10 homes on the market priced under $200,000 is sold --- as compared to 1 in 15, 16 or 24 for the higher price ranges.

Yet at the same time, expensive homes are performing well!


   *** 2009 total sales figures are extrapolated from Jan 1 - June 15 data.

Of note, the decline in home sales in our market has not affected all price/size ranges in the same way.  Since prices change over time (homes shift into different price segments), I examined the change in pace of home sales by dividing our market into starter homes (0 - 1499 SF), mid-range homes (1500 - 2500 SF) and large homes (2500+ SF).  You'll note that:

• The pace of starter home sales has fallen 58% between 2006 and 2009.
• The pace of mid-range home sales has fallen 58% between 2006 and 2009.
• The pace of large home sales has only fallen 30% between 2006 and 2009.

So, while it almost certainly takes longer for larger homes to sell, it's not because there are fewer buyers seeking that product.  In fact, the buyers haven't fallen out of that price/size range nearly as much as they have disappeared from the starter home and mid-range sized home markets.