THE MARKET HAS GONE “TICKLE-ME ELMO”!

Remember the Christmas season when “Tickle-me Elmo” was the hot gift? People were fighting over the last doll on the shelf. Well, the real estate market is somewhat like that right now. . Homes are flying off the shelf in only 24 hours with multiple offers, many times getting more than asking price. Granted, the entire market from $1,000 – $10 million plus isn’t insane, but a majority is. Basically anything under $600k is in a clear Seller’s market at the moment, while the markets immediately above that are still in a mild Buyer’s market. Let’s look closer at the numbers….

DEMAND: Demand continues to be up more than 20% over last year, 23.7% to be exact. This is the most active April since 2005 and we could see some serious record breaking numbers come June. Consumers/home buyers are all feeling really confident due to the job numbers (accurate or not), the soaring stock market, and continuously and historically low interest rates.  Homes are literally flying off the shelf. In fact, we are seeing homes get sold before they even officially hit the market. If you, or someone you know is in the market to buy, you better have ALL your ducks in a row and be ready to make a VERY quick decision.

SUPPLY: This number continues to track about 20% off of the 5 year trend. We suspect that this lack of supply will continue until prices get back to where values were in at least 2006. At that level, Many who bought before the crash can probably afford to sell their home and move on.  Right now, nationally, we are at about 2003/2004 levels and with nothing to really cause (thankfully) values to jump quickly, we don’t believe we will see the increase for at least 3 – 5 years. Welcome to the new normal….

SALE PRICE RATIO: The average LIST TO SALE PRICE RATIO continues to sit around 93.5%. That’s a decent number for maintaining values, which is proves that the market has stabilized. In order to see appreciation, that number needs to be closer to 95%. This is based on the last 8 years of data on this ratio and when we have seen decent appreciation. Back in 2005 and 2006 we saw many months that were in the 97% and 98% range, which, for the whole count, is a ridiculous number. That would represent TOO much appreciation, as we saw during that time frame.

CONCLUSION: I’ll repeat what I said last month – It’s our opinion that the current real estate market represents an amazing opportunity, one that we may not possibly see again for a very long time.  Prices are still well below where they “should” be and interest rates are still VERY low, under 4% and the overall economy is showing signs of stability.  Given all of those signs, it’s a great time to be in the market.  However, each person’s situation is unique and it is always recommended to talk to a highly professional agent about whether it is the right time for you. If you are wondering that, please give us a call at 484-713-2413.

DEMAND	SUPPLY	PENDING
AVG SALE PRICE	LIST TO SALE PRICE	Four Steps to Recovery
STILL BARGAIN PRICES!	HISTORICALLY LOW INTEREST RATES	AFFORDABILTY

Share on Facebook

HOT, HOT, HOT!!

The real estate market is active as we have ever seen it in 7 years.  If you know anyone who is considering a move and wants to work with the best agents around, please let us know and we can introduce ourselves and our team. (Shameless plug. . . )  So, let’s look at the details. . .

DEMAND: Demand is up slightly over both last year and the 5 year trend, but not by much.  However, if one looks at the pending numbers for February, it was up significantly over both – by 20%!  So, if that’s any indication of what the demand will be for throughout this month, we could see a massive amount of closings. Perhaps more than we’ve seen since per 2006!

SUPPLY: Supply continues to float around 20% under both last year and the 5 year trend.  As I stated last month, this isn’t as bad as it looks, in some respects. On one hand, Chester county has a 6 month of inventory, which is a balanced market. However, on the other hand, what we are finding is that the “A+” listings, or homes that are in the very best condition, are hard to find. Also, if you look at some of the more micro markets, such as “move up” homes in the west chester school district (homes between $300 & $600k), there is less than a 4 months supply. That is a very strong seller’s market.  There specifically seems to be a run on “move up buyer” homes in the Chester county area.

LSPR: There is also some good news here in that the List to sale ratio, or the amount the seller receives compared to what they are asking to get for the home, is up to almost 94%.  This is a significant number.  The more stable and close this is to the about 95%, the healthier the market it is. The reason for 95% instead of 100% is that if sellers across Chester County were getting 100% of asking price, then something wouldn’t be right, or healthy and prices would be surf to be driven way up, over what they should.

CONCLUSION: It’s our opinion that the current real estate market represents an amazing opportunity, one that we may not possibly see again for a very long time.  Prices are still well below where they “should” be and interest rates are still VERY low, under 4% and the overall economy is showing signs of stability.  Given all of those signs, it’s a great time to be in the market.  However, each person’s situation is unique and it is always recommended to talk to a highly professional agent about whether it is the right time for you. If you are wondering that, please give us a call at 484-713-2413.

DEMAND	SUPPLY	PENDING
AVG SALE PRIC	LIST TO SALE PRICE	Four Steps to Recovery
STILL BARGAIN PRICES!	HISTORICALLY LOW INTEREST RATES	AFFORDABILTY

Share on Facebook

Could we be out of the woods??

The big headline is the relative decline in homes for sale.  However, as you will read, when you put it in perspective, it is actually a very good and positive thing. When asking if we are out of the woods or “recovered” yet, that depends very much on the larger, national picture. Locally, it seems that we have come into the sunshine and have bright days ahead of us. That could, however, be crushed very quickly if the national climate changes. Let’s look at the details. . .

DEMAND: The demand (number of closed sales) continues to be very strong. January saw 309 closed sales, which is the best January since 2007. That’s a very good sign that prices are about to experience a strong rise. Couple that with the “inventory crisis” and you’ve got a very interesting climate. Demand is up 19% over last year and if you compare it to the lowest year (2009) it’s up almost 30%.  If the overall economy continues to go well, interest rates stay reasonable and inflation doesn’t creep up, I might be comfortable saying we are definitely “out of the woods”.

SUPPLY: “HOLY HOUSING SHORTAGE BATMAN”!!  Well… it’s not quite that bad. It is true that inventory levels haven’t been at this level since 2005.  Today (Feb 5th) inventory registered at 2592 homes for sale. This time last year there were roughly 3200 homes for sale.  HOWEVER – while these numbers seem to be off drastically, a bit of perspective is needed.  This year marks the 5th year we are in this downturn and that means that the 5 year inventory trend is inflated over a “normal” balanced market. What really brings perspective is the supply of homes for sale when measured in months. I’ll spare you the boring math equations and just say that currently we are at a 6 month supply. That’s pretty good and shows a fairly balanced market. Anything less than 6 months is much more a “seller’s” market and anything more leans towards a “buyer’s” market.  So while it seems there isn’t much to choose from, it’s actually fairly relative and with some perspective, it’s actually quite “normal”.

LIST TO SALE RATIO: In January 2013 Home Sellers received the most for their homes, relating to what they were asking, since 2008. Remember that January of 2008 had yet to see the downturn. This is another great sign. I expect us to see this ratio move much closer to 95% this year which hasn’t been seen since 2007.

PENDING: Trackable pending sales continue to indicate elevated levels of activity to come. Pending sales are homes that are under contract, have completed inspections but haven’t settled yet. This number can’t be accurately determined until two months after the month ends, which is why it is a somewhat secondary number.  It’s still important as it does predict the near future for activity/demand.

CONCLUSION: Last month I stated that I believed this first quarter of 2013 will be the best first quarter in as many as 5 years. The numbers are indicating this as January was one of the best January’s in at least that long. This is good news for everyone. It’s hard to say if all this positive news is causing prices to trend upward, but I would be willing to be there is some upward movement.

For Buyers – if you are on the fence, NOW is the time to get moving. It may even be a little late to get “the best rates and the best prices”, however, with rates and prices trending upward, now is the next best time.  I feel confident saying that the interest rate is lower now than it will be in 3 – 6 months and the same goes with prices.

For Sellers – If you have bought your home within the last 8 years, it is still a very tight game and you will need to call us to see if it makes sense for you to make a move or not. But if you have owned your home for longer than 8 years, then it’s a pivotal time for you to make that move, as you will get the best deal on both the buy and sell side you can hope for.

So if you or someone you know has been on the fence, tell them to CALL US TODAY and take advantage of this great opportunity.

DEMAND	SUPPLY	PENDING
AVG SALE PRICE	LIST TO SALE PRICE	Four Steps to Recovery

Share on Facebook

INVENTORY CRISIS!!!

The inventory crisis continues!  As I write this, there are 2480 homes for sale in Chester County and we haven’t seen that since winter of 2004. This level surprises me even though I expected a drop but not this drastic. Let’s see how that affects home buyers, sellers and owners in Chester county…

DEMAND: It continues to be up over 17.5% over last years numbers. An interesting observation is that the gap between 2011 and 2012 demand widened starting in September. It’s a good sign of positive momentum. What you want to look for is the activity to continue to be above the 5 year trend. It would really be remarkable if 2013 ended up tracking significantly above 2012.

SUPPLY: What can I say… it’s pretty dismal, which can be both a positive and negative thing, depending on what side of the transaction you are on. Right now, it’s too low as far as I’m concerned as it creates a bottle neck for buyers. If it were up maybe 5%, it would help the market to be even more active.  What’s holding the inventory back? It’s simple. Prices have not come up enough yet to pull waiting sellers off the sidelines and make it worth it for them to sell.  Once we start seeing the prices come back a bit more, it seems that the flood gates may open and balance returns.

LIST TO SALE RATIO: For the last 5 months the list to sale ratio has hovered around 92.7 and appears to have stabilized. That’s a great sign that the market continues to improve. In addition, the average for the year is up almost about 1.5% over 2011 (92.09% vs 90.58%), and is the best ratio for the last 3 years, annually speaking.  Historically we want to see this rise up to around 95% or a bit better.

PENDING: Pending sales were much closer to last years numbers and the 5 year trend in November. This number isa good indicator of the activity we should be seeing in closed sales within the next 60 days.

CONCLUSION: My  belief is that the next quarter in the local real estate market is going to be the best first quarter in as many as 5 years. This is based on the momentum that was created in the fall, as well as the low inventory and the early, elevated activity we are seeing in the local market right now. As a current or potential home seller, the low inventory and low interest rates are really good for you. You will get the most money possible for your home, very possibly more than one offer at one time and that it should sell quick.

As a Buyer, you certainly won’t have as much to choose from, however, interest rates are still have historical lows, and great deals are still available. With the economy seemingly improving, interest rates are very likely to head north. Another positive is that we know that those who are selling their home are much more serious about selling, so they are much more willing to work with you on price and terms than when there is an abundance homes on the market and you have half committed sellers.

As always, if you want an analysis on your home or a specific areas, please don’t hesitate to contact us!

DEMAND	SUPPLY	PENDING
AVG SALE PRICE	LIST TO SALE PRICE	National Home Prices
Affordability Index	1989 vs 2011	Four Steps to Recovery

Share on Facebook