Predicting the Momemtum of July Real Estate Transactions
David Bates / July 21, 2011-11:07 am
In June, MA-PASS, the company that coordinates hundreds of thousands of showing requests for Massachusetts real estate agents, informed the Bates Real Estate Report that the company had processed 11 percent more showing requests in May 2011 than it had in May 2010. As a result, this blog predicted that closings for June would be “the best comparative month of the year” thus far.
A Greater Boston MLS report, however, subsequently showed that closings for single families and condominiums in June were off 18 percent from the previous year. That’s certainly an improvement against the disastrous months of April (-24 percent) and May (-21 percent), but it’s not a significant improvement and it’s not the best comparative month of the year (January at 103 percent).
Where did we get it wrong? Well, we bet against June 2010, an unusual month in that it was the key month for which many buyers anticipated they would have to close their homes to receive government credits. Also, we may have slightly overestimated the speed at which an increase in showings will be reflected in an increase in closings. After all, if the increase in showings spiked at the end of the month — due to the 45-day nature of most closings —then perhaps only a small percentage of those spiked closings would be seen in the following month.
As noted in our June 14th post, the natural order of real estate transactions is showings/under agreements/closings. So what might be more readily noticed from an uptick in showings is an uptick in under agreements. If that’s the case, that’s what we saw in June: showings in May went up 11 percent and under agreements in June went up 9.5 percent.
As far as predicting July is concerned, MA-PASS just informed us that showings in June 2011 surpassed June 2010 by 11 percent. Again, this is not apples-to-apples in that the amount of listings in June 2011 is not the same as June 2010, but we have tweaked our prognostication calculation and believing the momentum of two excellent showing months will carry the day, we predict that July will become the best comparative months for closings since the beginning of the year.