Worried about the value of your home? As we have discussed in previous blogs, the best future indicator of your home’s value is the Housing Inventory level in your market. Historically, housing inventory has predicted future pricing in the following manner:

• Appreciating Market = <5 months inventory
• Stable Market = 5 to 6 months inventory
• Depreciating Market = 7 to 9 months inventory
• Double Digit Depreciating Market = 9+ months inventory

Year over year, the Charlotte Region’s inventory levels were up in all price ranges below $250k. Above $250k, inventories have come down significantly from last year and are even below 2008 inventory levels. (Please note the extremely tight inventory levels in September 2007 at the height of the market – inventories during this peak season ranged between 2.5 and 6.2 months. We can see that the inventory levels at the peak were solidly in an “appreciating market”.)

Below $250k: The year over year inventory increase could be explained because, in September 2009, the lower priced buyers were encouraged to buy because of the tax credit. Since the tax credit is no longer available, the inventory levels in the under $250k market are moving to levels that are similar to the rest of the market. Therefore, if your home is listed for under $250k, you are seeing an increase in competition and need to be conditioned and priced correctly to sell. This increase in competition is causing the price of your home to depreciate faster. Therefore, price compellingly to get your home sold today because there will be more competition tomorrow.

Over $1M: With very few new $1M+ homes being built, the inventory in the upper end has come down significantly. Closings are still slow with only 12 occurring in September 2010. However, the dramatic decrease in $1M+ homes listed, from 955 in September 2009 to 638 in September 2010, has created a tightening of the inventory for the upper end market. In September 2010, the $1M+ inventory equaled 53 months, a 44% decrease from this time last year when $1M+ inventory equaled 95.5 months. Though the $1M+ price range is still over-saturated, we see that the market is tightening and well-conditioned homes, priced correctly are selling in the upper end market. The upper end is gaining momentum nationally, as well. For a great article on the subject, read Steve Harney’s blog Luxury Real Estate Market Gaining Momentum and Monday’s blog post from Phyllis Brookshire.

Month over month, we saw very little movement in overall inventories. Overall, the Charlotte region’s inventory was 14.8 months in August 2010 and is currently at 14.7 months for September 2010. With housing inventory still over 9 months in all price points, our market is still over saturated and prices are likely to decline in the near term.

What does this mean to you? Look at the Best Graph of the Year blog for a better picture.