Sick of the snow yet? I can hear a resounding YESS!!! coming from those of you who are reading this. As I write this, on March 4th, the low tonight is 12 degrees. Not real pleasant. The weather has kept both buyers and sellers indoors and it’s showing up as both pending sales being low and new listings being exceptionally low. The current market is a really tough place for Buyers but a fun place for sellers. Let’s look at the details. . .
DEMAND: As mentioned in the introduction, the weather has definitely had an impact on the real estate market. The first place we are seeing it is in sold homes. While we generally see a slight dip in number of homes sold between january and february, we don’t usually see this much. In January, approximately 320 homes settled, so far, february is only showing 258 homes. I firmly believe that’s due to the weather, as well as there not being much of anything for buyers to look at. Moving forward, that is the big issue. The weather will subside, but the amount of, or lack thereof, homes for buyers to consider to buy is at a crazy low level and will have an affect on the amount of homes that get sold. Buyers are going to need a top notch agent that can stay on top of every new home that comes on the market and get them in asap. In addition they are going to HAVE TO be mentally prepared and physically prepared to write an offer on a home they see, while they are still at the house. That’s the kind of market we are facing right now.
SUPPLY & INVENTORY ACCUM: This is really the big issue right now – how many homes fit any given buyer’s criteria. . . The answer is – NOT MANY!! It’s downright discouraging. Typically the inventory does start to creep up between January and February, however, this time around, it actually dipped just slightly. For 2012 and 2013, the difference in homes for sale was just about 200 homes. This time around it went from 2292 to 2288. We believe that part of that issue is the weather, as well as the time of the year. We have a lot of people in our world that are going to be listing their homes in March and were just waiting for the warmer, sunnier weather. Right now, the inventory levels, measured in months is about 4.7. That is a STRONG seller’s market. However, another associate of mine has run the numbers and uses a slightly different calculation than we do and believes there is only about 3.7 months of inventory in Chester County. That number is certainly troublesome. It’s great news for sellers but really bad news for buyers.
SLPR: For the first time since 2006, the average List-to-sale-price ratio was above 95% this month. That’s the comparison between what sellers were asking and what sellers were actually getting. This is quite significant, as this time last year the LTSP ratio was only 92.8. Don’t forget that this takes into account those homes that sell for 90% of asking and those that sell for 100% of asking, which there are more and more. In many cases, the homes that most buyers are looking to get are closer to 97%+ of asking price. What this means for buyers is that there isn’t a whole lot of room to negotiate and then add on top of that the fact that there are a lot of multiple offer situations and it makes for a really tough time for buyers, especially if they still have their minds stuck in 2011.
RATES: We’ve seen a nice little dip in rates lately, where they’ve approach 4% again recently. For those that can take advantage of that, they better do it quickly. All bets point toward the rates starting to climb again back to the 5% range. At this point, that type of movement in rate shouldn’t affect momentum too much as those that really need or want to make a move, will. 0.50% of a difference in rates won’t prevent them from achieving what they want. It will affect those stretching to get what they want as it will put them out of the running.
CONCLUSION: This has to be the MOST DIFFICULT market for buyers that we’ve seen in the last decade, possibly longer. The extreme lack of inventory is really tough on buyers, especially those who have a very specific and urgent deadline. On the other hand, this is a great time for sellers as they have a majority, if not all of the power. The only issue we haven’t really touched a lot on in this article is the fact that we are probably going to see a lot of appraisal issues again this spring, as we did last fall. At least there is a very real possibility of it. So, if you are a buyer, brace yourself. If you are a seller, enjoy it!!
Chester County Market Statistics: January 2014 Comments Off
START YOUR ENGINES!!!
It might be one of the coldest and most “wintery” starts to a year that we’ve seen here in Chester County in a long time, however the market is off to a strong start. Inventory is low – ridiculously low – helping sellers and making things a bit difficult for serious buyers. Let’s look at the details….
DEMAND: 2014 is off to a very strong start. The demand is definitely there, however one big issue buyers are facing are actually finding a home that meets their needs. There isn’t much to choose from. By the numbers, the demand is slightly elevated over last year and we fully believe it would be higher if the inventory was there. One somewhat concerning number is the Pending sales. Pending sales are down by about 25%, however, these are VERY early numbers and could be off as much as 10- 15%. We will know a bit more in a few weeks. We fully believe it’s because there isn’t much to choose from. Time will tell.
SUPPLY & INVENTORY ACCUM: The word pitiful comes to mind. There is only 4.4 months of inventory currently which is 12% below last year and 27% below the 5 year trend. It is really making it very difficult for our clients to find exactly what they want and they are having to make a lot more compromises than normal. To put this in perspective, the 5 year trend puts the supply at 3165 yet currently there are about 2300 homes for sale. It’s definitely a squeeze.
SLPR: The List to Sale Price ratio is one a VERY bright light for sellers as it is currently 94.7%, which means if someone is asking $300,000 for their house they would get, on average, about $284k. The 5 year trend puts it at 90.7%, which means they’d get $272,100. That’s a $12k difference! VERY good news for sellers. Even better news is that numbers is for all of Chester County and most of the “more desirable” area’s are getting as much as 97%-98% of asking. This will be a very good year for sellers.
CONCLUSION: Overall it’s very good news. The big tension is the inventory and if there were more places that were available to sell, it would help the overall valuation of homes. What this means for buyers is that they are either going to have to wait longer and have much more competition than before or make more compromises then they may have been planning on. However, for those looking to sell, it’s very good news, only if you need to sell. If you are looking to sell AND buy at the same time, you are going to have a VERY tight plan and fully understand what the market is doing before heading into the rough waters. If this is you, please call us. We are very good at helping clients though that transition.
Chester County Market Statistics: December 2013 Comments Off
BREAD BEFORE A STORM…
What’s the bread shelf look like before a snow storm? Pretty bare right? That’s what the local real estate market resembles, as you will see, there isn’t much at all to choose from as far as homes for sale. However, this isn’t necessarily a bad thing. As you will read, the market has “arrived” and we saw tremendous stability established in 2013 and are in a great position to have a solid year in 2014. It’s estimated that values have improved as much as 4% in Chester County and it’s looking like that might be the case again in 2014. Let’s look at the details…
DEMAND: Demand/closed sales in December made an uncharacteristic jump in December, 20% more than last December, which was unexpected. It’s a good sign that the market is carrying a lot of momentum into 2014. Overall, the early numbers are saying we sold almost 1000 more homes in Chester county than last year. The total early number is 6009. It’s likely to go up as numbers are refined. Last year only 5152 homes were sold and 2011 saw only 4296 homes sold. Comparing 2013 to 2011, see’s about a 40% increase in the number of homes sold. That’s a pretty good indicator that the market has “arrived”.
SUPPLY: December, as expected, saw the inventory plummet to a measly 4 months. That means that if no other homes were ever available again, we’d sell out of homes in only 4 months. Combine the seasonal exodus of sellers from the market with the highly active market and that’s how we get the incredibly low amount of inventory. I’ll expand on what that means for both buyers and sellers in the conclusion.
SLPR: (Sale to list price ratio) This stat continues to remain consistent and steady which is great news. The average for 2013 has been just over 94% of asking price. This means that the sellers don’t have to concede much at all in their asking price, as long as it’s set right from the get go and that there is tremendous stability in the market. In many of the more “desirable” area’s the ratio is more around 98%.
INVENTORY ACCUM: As mentioned previously, we only have about 4 months of inventory available. I honestly don’t know when the last time we saw levels that low here in Chester County. My numbers only go back about 6 years on this stat and it’s quite possible and likely we saw it back around 2004. The good news for buyers is that by the end of this month, we expect it to be up, closer to 5 months and probably 6 months by February/March. We actually don’t want inventory levels too low and 6 months is a very good number to shoot for.
CONCLUSION: In conclusion, if you are looking to sell right now, it’s a REALLY great time for it. There are plenty of Buyers out there and you are going to get a great price for your home and you have very little competition, as opposed to waiting until March and April. For buyers – you have to be patient and you have to have a great agent and /or team next you that is going to go the extra mile in making sure you don’t miss out on the next home that meets your needs. If you aren’t seeing a home that meets your needs, and you are being realistic in your expectations, it’s just a waiting game. We would expect you to have to wait at least as much as 2-3 months. It’s hard to tell. In the mean time, rates are predicted to go up. Give us a call if you need expert advice and an inside perspective on the market. We’d love to help.
Chester County Market Statistics: November Comments Off
ONLY TIME WILL TELL…
While one sector took a hit this month, the overall market numbers look pretty strong. If the market is a car and the speed tells us how well the car is doing, we’d say the market is moving at about 55 mph – not too crazy but not too slow either. Let’s look at what each section tells us. . .
DEMAND:For the first time in 2013, the number of homes sold in November slipped below last years number. While this one number by itself doesn’t really concern us too much, it is a sign that the market has finally hit a bit of a wall. This was eventually going to happen as the numbers couldn’t keep outdoing themselves, given the year we’ve had. As we look at the other numbers, you’ll see why this number, by itself is not too much of a concern.
SUPPLY: The supply of homes still runs underneath last year, but it’s getting close. We expect levels in 2014 to mirror last years, with a slight potential to float just above. The thinking there is that we don’t expect the market to be as active as 2013 which would allow inventory to be just a bit elevated above this year. Inventory levels are important to follow as they tell you pretty quickly what “speed” the market is going. . . Is it just putting along or is it on the highway? Right now, we’d say its going about 55 mph – not too fast, but not really slow.
SOLD TO LIST PRICE RATIO: This number continues to show promise. Again this month it is around 95% which is a great indicator that seller’s are getting very close to asking price. We are still seeing some multiple offer situations and even if our clients offer is the only one on the table, they still have to pay close to asking price. This is going to help prices continue to float nicely upward heading into 2014.
INVENTORY ACCUM: In November, the months of inventory available sank below 6 months again to about 5.25 months. This indicates that the market is still slightly tipped towards the seller’s advantage, which is what we are seeing. Overall, if the levels stay around 6 & 7 months, it’s a healthy market.
CONCLUSION: When looking at the Chester County market from a 10,000 foot view, things continue to look good. The level of supply, the inventory accumulation and the Sold to List Price Ratio are all pointing to a positive, strong market. With interest rates in the low 4’s and overall home prices still relatively low, the market is also great for buyers. The big question is going to be the overall economy. There are rumors of some hits coming to the economy by way of “Obamacare” and it’s effect, as well over speculation in the stock market. The housing market is very much driven by how confident consumers are in their employment and the overall direction of the economy. If that confidence weakens, it will affect the housing market and prices. If they continue to see signs that they can remain confident, the current market will continue. Only time will tell.
Chester County Market Statistics: October 2013 Comments Off
JUST AS IT SHOULD BE!
All the indicators are telling us healthy things, especially for this time of the year. As we wrap up the last few months of the year, it appears that next year should bring little excitement but good news as far as appreciation goes. Let’s look at the details…
DEMAND: Demand continues to hover above last years numbers. Pending sales are indicating that perhaps those numbers will reconcile in the next few months, but we will see.
RATES: Rates have been really good lately. We didn’t expect to see rates below 4% again but right now you could get an FHA loan below 4%. 0.25% of a rate, at this level is not insignificant. So, if you are on the fence about buying, take advantage of the rates. it could save you $50 per month or $600 per year.
SUPPLY: As expected, the supply of homes for sale is slowly but surely meeting up with last years numbers. We saw a significant drop in inventory between October and December and inventory levels are already low and there is no indications we will see that again.
SLPR: October saw a bit of a spike in this indicator, jumping to above the 95% mark. This helps the overall value of homes to increase as this is the average over all Chester County. So this means that the more desirable area’s are getting 97%-99% of asking. It also means the market is still very strong.
INVENTORY: We continue to float at just about 6 months of overall inventory. This indicates a healthy and balanced market. Again, this is all of Chester County which includes the higher price ranges where inventory is closer 9 or 10 months and then the more active price ranges where it’s more like 4 months.
CONCLUSION: Overall, the market is just as it should be. It’s actually at a very “normal”, balanced place. This is great for both buyers and sellers. It means that buyers can get a good deal and not worry about having the value sink on them and sellers know that they will sell their homes quickly and for a good price. Happy Holidays everyone, this is great news!!
Chester County Market Statistics: September 2013 Comments Off
With strong signs continuing to show through in the local real estate market, things continue to show signs of smooth sailing. There are some signs of things slowing down however that has been anticipated. Let’s look at the details. . .
DEMAND: Demand seems to be coming into a soft landing with last years numbers. While the numbers are still elevated over last year, each month the gap becomes less and less. This is to be expected as we believe the elevated activity to be caused by pent up demand from those that intended to be moved of the last 5 years but because of the market, could not. On the other side, if demand dips below the 5 year mark, this will indicate a slowing market which we don’t want to see.
RATES: Rates have stabilized and in some cases come back down. The typical rate i have seen for a 30 conventional fixed rate loan is about 4.5. The jump in rates has certainly caused many to jump into action as they don’t’ want to miss out on great rates. This won’t last forever.
SUPPLY: Supply has taken a somewhat unexpected turn up. Seasonally the inventory seems to tread water and remain even but the levels jumped a bit more than we expected. This isn’t a bad thing unless it continues to rise to the 5 year level, which is extremely unlikely. We feel confident we are out of the woods of the past 5 years.
SLPR: The list to sale ratio continues to remain elevated over the 5 year trend and last years numbers. This is a very good indication that the market continues in a good direction and prices have stabilized. While the overall rate in all of Chester County is around 95%, the area’s that most buyers are purchasing in are more like 97-98%. That’s significantly more than what it has been the last 5 years.
INVENTORY: Inventory jumped slightly this past month above the 6 month level which is indicative of the fall market. Many people come back from vacation and try their hand in the market. At this point it’s not a point of concern.
CONCLUSION: With rates remaining in the mid 4′s, demand continuing to be strong and sellers getting very close to what they are asking, the market continues to show signs of strength. In addition, there are some signs of slow down such as the demand numbers and inventory accumulation, however these numbers are not enough to cause concern. It’s a great market to be in regardless of whether you are buying or selling. We do need more “A+” homes to sell, especially in the West Chester, Great Valley and Downingtown area’s. If you know of anyone, please let us know and we will help them make the best decision possible.
Best Real Estate Articles from August 2013 Comments Off
Here are the best real estate articles I’ve read in the last month:
- 6 Tips to Weigh the Best Resale Home Improvements (ABC News)
- Delinquencies on the Decline (NY TIMES)
- Foreclosures Could Reach Lowest Level in 6 Years (Realtor.com)
- Housing market gets more buyer friendly (USA Today)
- Home Sales Seen Rising to Three-Year High: U.S. Economy Preview (Bloomberg)
- Housing Market Recovery May Be Short-Lived (Fool.com)
- Lawler: The Fed, FHA, FHFA, and “Guv’ment” Policies on Mortgage Rates
- Construction Spending in July: Private Spending increased, Public Spending Declined
- Should you pay your mortgage off early? (TaxWatch)
- Rising Rates Causing Buyers to Back Out (Realtor.com)
- Home values rise nationally for 17th consecutive month
- Home prices push past rising rates, says report (CNBC)
- LPS: Mortgage Delinquencies Decline in June, Distressed Sales down Sharply
- Foreclosure starts plummet to six-year low
- Should I Wait for Interest Rates to Come Back Down?
Chester County Real Estate Statistics: August 2013 Comments Off
2013 is the year that our local market has seen the proverbial plane start to gain altitude again. The market is on fairly solid standing and all indicators are pretty confident on where we are going. There are no real indicators that are saying we are headed for trouble again… at least not yet. It’s conceivable that if the overall economy takes a hit – either terrorist or other – we will get hit again as well. But our local market continues to do well.. ..
DEMAND: Demand continues to remain high, however the gap between last year and this year has closed a bit. The bigger focus is what PENDING sales are doing. Pending Sales for July (accurate readings on pending sales go back two months) are almost level with last year. Since hitting a high in April, pending sales have been coasting back to 2012 levels and the rising interest rates have definitely affected that. It’s our opinion that the market has basically been releasing pressure for the first part of this year. The pressure came from a back log of folks that would have moved if the market and economy were better, as historically people moved every 7 years. Once the downturn hit in a major way in 2008, people put moving/selling a house on the back burner. Many of those were people who bought back around 2000-2003. Many of those people have waited until they couldn’t wait any longer, which is a lot of what we’ve seen this year – that pressure released.
RATES: Rates continue to be stable in the mid 4′s, maybe up to 4.75% conventionally. If the stock market starts to climb again, it’s likely rates will go up too.
SUPPLY: Inventory levels are remaining relatively stable, just under 2900 homes. 2005 was the last time we saw this level of inventory, at this time of year. In August of 2005 the inventory was at about 2600 homes. For the next 6 years inventory levels averaged around 3800 homes. It wasn’t until last year that we broke that level. We believe this is significant. Think of it this way – if the “Plane” was taking a nose dive staring in 2008, 2012 was the year it pulled out of the dive and leveled out. Then 2013 is the year it started to gain some altitude again. This Inventory level is evidence of this.
SLPR: The list to sold ratio continues to hold on to the 95% number for the 3rd month in a row. Another indicator that we are gaining some altitude. 2007 was the last year the ratio was above or at 95%. While the market was showing signs of decline, it was a good market to emulate as far as balance is concerned. The years we saw too much appreciation, namely 2003-2006, the ratio was 96% and above.
INVENTORY: Inventory continues to be an issue overall. This past month, the inventory level dropped almost a whole month from 6.4 to 5.6 months overall. That tips the scales to the “Seller’s Market” side of things. This next month will be a pivotal month. It’s going to tell us whether the market is going to continue ahead with a lot of steam or if the steam is going to fizzle. If the inventory level goes down too much, buyers are going to have a very hard time finding what they want. That’s really important as the “move up buyer” won’t move unless they have something that they really like to move into. They need to see what they want before they move forward.
CONCLUSION: The Chester County Real Estate market is in a great position. Inventory is moving, sellers are getting great prices for their homes, buyers are getting great deals with the interest rate still low. It’s a great market to be in regardless of whether you are buying or selling. We do need more “A+” homes to sell, especially in the West Chester, Great Valley and Downingtown area’s. If you know of anyone, please let us know and we will help them make the best decision possible.
Chester County Market Statistics for July 2013 Comments Off
NO SUMMER VACATION FOR THE MARKET!!
While multiple offers have slowed up a bit, the market is still moving at a quick pace. This time of year is typically pretty slow, whoever, that is NOT the case with 2013. I have added a new stat to keep an eye on, which is inventory. This is a key number to keep an eye on because it is an early indicator where the market is headed. The more inventory we have, the slower it is, the lower prices go and then of course, the opposite is true.
Let’s take a look at the specific numbers and details….
DEMAND: Demand continues at high levels – 25% over last year and 30% up over the 5 year trend. This is a very good sign. One fact to note is that the pendings in June, which indicate how many closed sales will occur two months later (August), saw a sizable drop off in activity yet was still a good bit above last year and the 5 year trend. So it looks like the 2nd half of the year may be a bit cooler than the first. We will have to see.
RATES: Rates have taken a little bit of a step down in the last month. They are hovering around mid 4′s compared to last month they were up closer to 5. It’s believed that this is causing the momentum of the market to continue forward through the typically slow months. I can say hasn’t slowed around our office.
SUPPLY: Typically the inventory levels from June to July indicate the beginning of the annual fall off of the inventory, however, this year, the inventory is almost exactly the same as the beginning of last month. I don’t know if that is significant at or, indicating that inventory may start to climb… only time will tell. I doubt it. It is good to have a bit more for buyers to choose from. It’s something to keep an eye on.
SLPR: This is a big number this month – it was 95.3. It’s been 5+ years since we’ve seen that ratio. It indicates that more sellers are getting very close to their asking price. Last month was 94.9, essentially 95%, which means that prices/values are on the increase as indicated in last months report. This makes the 11th straight month where the ratio is better than the 5 year trend. Again, another great sign.
INVENTORY: This is a new stat that I am starting to track as it is an important number and indicator as to what the market is doing over all. Last spring the overall inventory level started a decline that went from about 10-11 months on average down to about 6. 6 months is a “Balanced” market, meaning that neither the buyer or seller have the power. Anything above about 7 -8 months is a Buyer’s market, anything 5 and under is more of a Seller’s market. Of course, more micro markets like Downingtown, West Chester and Great Valley/Malvern have lower inventory levels as they are higher in demand, creating strong seller’s market. However, looking at the overall county, it’s a great sign of a good, stable market.
CONCLUSION: Despite the summer season, the market has not gone on it’s usual “vacation” and slowed down. It’s kept the upbeat pace it’s had most of the year which is the first in a good number of years. Another good sign that its a good stable market and whatever price you pay today will be lower than the value in a few years. Deals continue to be hard to keep together but overall, with rates in the mid fours and prices still at great levels, it’s a great time to be buying. It’s also a great time to sell if the numbers line up right. If you or someone you care about needs real estate help or advice, please do not hesitate to have them call us. We’d love to help!
Chester County Real Estate Statistics: June 2013 Comments Off
It’s HOT OUT THERE!!
Multiple offers continue, rates are climbing and homes are still selling fast. Yes, it’s still hot out there, however “relief” is in sight. Mostly in the form or higher interest rates as well as the urgent buyers having made their move. The market is set to slow down a bit in the second half with the major focus being both rates and how much more homes will cost now. Don’t get us wrong, prices aren’t going up steeply, but the uptick is enough to cause those without urgency to throw in the towel… Let’s take a closer look.
DEMAND: The trend of demanding being up 20% YOY continues. However, when checking out pending sales it looks like a cool down may be coming in the next month or two. There are many factors that might contribute to this slow down from the urgent buyer supply being depleted to the rates raising, however we do expect a slight slow down.
RATES: Rates are the big factor right now. Last month they had just crossed the 4% line however, as I write this they are headed towards 5%. The going rate today for a 30 yr fixed, conventional loan is about 4.75%. This has had a strong effect on the Buyer pool, however that effect won’t be seen in the numbers for at least two months. The big questions are – where are they going to level out and how long will they climb? If you consider that about 2.5 months ago, someone could have obtained a 3.5% rate but now it’s above 4.5%, that is a 20% increase in the potential buyer’s mortgage or a reduction of 20% of what they can afford. This is no small issue. This will affect those who were in the market to buy and who were on the cusp of buying.
SUPPLY: Supply has started it’s seasonal decline. Traditionally, from here through December, the number of homes declines, on average as much as 19% from it’s peak in June. That means that we could see inventory levels at extremely low levels in December, possibly less than 2400 homes. In plain english – that’s LOW! The bright side of this is that it will continue to help prices to increase (we’ve seen about a 3% increase in value so far this year) however, the elephant in the room is the interest rate. That will greatly effect everything that happens.
LSPR: This is another good number as it was about 95% which means that prices are headed up, but not too drastically. In fact, they can’t as the rules the appraisers have to follow will greatly dictate what happens with values. In many ways the appraisers hands are tied when it comes to value. They can only look into the past and make judgements based on that and right now the present market is headed up yet appraisers can’t look at that. It’s causing a lot of issues in the market right now.
CONCLUSION: I gotta say – something strange is going on in the market. It’s all we can do to keep every deal together. This is a market wide issue. I don’t think I’ve ever heard of or seen so many deals fall apart and for many different reasons. It’s a little crazy, but it underscores the need for an amazing professional to be by your side. I can also say that the market has definitely rebounded and stabilized. The “seas” have never been rougher to navigate but it also may be the last chance to get a great deal on a home. Rates under 4% are gone, possibly forever (at least for a VERY long time) and prices are on the upswing so get your unfair share now. If you or someone you care about needs real estate help or advice, please do not hesitate to have them call us. We’d love to help!