by: Denny Grimes

First Quarter posts double-digit improvement over ˜07

My voice mail message light was blinking when I arrived at my office one Monday morning four weeks ago. Believing optimism trumps pessimism, I envisioned the message would lead to new business; it would be a great beginning to a new week.

I was right, sort of. I could tell by the tone of the man’s voice in the message that he was actually giving me the business because he did not like what he read in my latest article. I’ve learned that any message that begins with the words “Mr. Grimes” wouldn’t be one I’d want to build my week on.  

He basically accused me of lying in my article that came out in Sunday’s paper, just a day earlier. I reported that pending sales for the first two months of the year were up 16 percent over the previous year. He was then kind enough to read from The News-Press that was tossed on his driveway early that morning. He gleefully read that “existing home sales have fallen since the beginning of 2007.” I couldn’t help but wonder why he chose to believe the more pessimistic of the two stories. He must be a potential buyer.

I’m a glutton for punishment, because I stand by my comment. In fact, let me update my report by saying pending home sales for the first quarter of this year are up 29 percent from the same period last year. Don’t worry; there is plenty of room in my voice mail box, so if you feel you need to call and ball me out, be my guest.  

Before you do, let me explain the reason for the discrepancy in the sales numbers. Notice, I use the word “pending sales,” which means contracts that have been written but have not closed. The News-Press receives their monthly sales reports from the Florida Association of Realtors, and those reports use closed sales, although the word “closed” is omitted. I am trying to encourage them to add the word “closed,” so it will be less confusing for the public.

Solid arguments can be made for both methods of measurements. Those that use the closed sales approach rightly state that a sale shouldn’t be counted until it closes. Therefore, they only count closed sales. The disadvantage of that method is that closed sales measure what happened 30 or 60 days ago, not what is happening now.

The closed sales for January and February were lackluster because they reflected the market’s velocity from last November and December, which are typically slower months. You will soon hear that sales (closed) are showing improvement. Why, because pending sales have been increasing, therefore there will be an increase in closed sales. It’s not rocket science.

Your reporting method of choice will depend on when you like to receive your information. If you would rather watch The Masters via your TiVo over the Labor Day weekend, then you will prefer the closed sales approach. My preference would be to watch it live. Therefore, I prefer tracking pending sales because they reflect more of a real-time picture of the market’s temperature. Sure, some of the sales will fall out and not close, but that percentage is as predictable as expecting Tiger Woods to be in the hunt during the final round. The bottom line is that sales are increasing, so why not talk about it now instead of two months from now?




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