2005 proved to be a very good year for residential real estate. There were double-digit increases for single family detached and condos & townhomes. Single family detached closed 65,803 units in 2005 or an increase of 10% over 2004. Condos and townhomes closed 10,582 units in 2005 versus 8,630 in 2004 or a very large increase of 22.6%.

However, December numbers may be "flat" at best when all lagged closings have been reported. Single family detached is down 11.2% and condos and townhomes are down 3.2% from the same year ago period.

While the closings were down in December, the average sale price for all condos & townhomes and detached single family experienced large year-to-year price increases. The average price declined for December 2004 from November 2004 and historically the price increases, so we may be comparing a normal increase in 2005 versus an abnormal 2004 decrease, which amplifies the situation. However, the average sale price for condos and townhomes was $198,742 in December or an all-time high. Plus, the year-to-year increase for detached single family was 9.3% or the largest for the year.

Even with December’s all-time high, the average sale price for condos and townhomes only increased 0.3% from 2004. The average sale price for detached single family increased a modest 6.4% over 2004.

The average days on market declined in December for all single family for the 4th consecutive period and seven out of the last nine periods. For the year, days on market was 79.0 versus 79.1 for 2004. This is the first year-to-year average DOM decline for all single family since 1998-1999.

The end of December is typically our largest period to period decline in housing inventory. A lot of homes are taken off the market over the holidays and put back on after the first of the year or early spring. When comparing our December inventories, the market expanded by 8,000 units from December 2002 to December 2005 or an increase of 25%. However, during the pervious three years, 12/99-12/02 the inventory level increased 12,000 units or an increase of 85%. We have clearly had a much stronger market the past three years versus the previous three.

We have had a very good housing market the past three years and through 2005. However, there are still a number of negatives that can adversely affect the housing market and maybe they are starting to show up in December. We have known about the hurricane disasters, high gas prices, and Delta’s problems, but we have added a couple more situations to experience in 2006. The recent announced closing of the Doraville and Hapeville auto-manufacturing plants can only add negatives to the economy and housing industry.

Let’s hope our resilience continues in 2006 and we have another good year in housing.

Thank you,

Steve Palm 
Smart Numbers