Chester County Real Estate Statistics: April 2010

Posted on: 05-5-2010 Posted in: Chester County, Market Update, Monthly Update, News

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The Chris & Caleb Team Assessment:

The tax credit has officially ended!! And good riddance. . . This was a nice gesture by the government to help kick start the market, but it is time to see if the market can stand on its own. That will take another three months while the market flushes out the remnants of tax credit. I firmly believe we will see a slight dip in prices, with the demand falling about 25- 30%. It won’t drastically effect prices but it will be a healthy correction.

Let’s talk about what the numbers are telling us. Let’s start with “DEMAND” or closed sales. Closed sales in April were around 400 mark, hovering just below the 5 year trend and a good deal above what it was this time last year. May and June will continue to see an unusual increase, following the unusual, but expected, increase in pending sales this month. I have to tell you – the last two weekends of April, people were going nuts! It really wasn’t healthy.

Next is the Active Listings or “SUPPLY”. For the month of April, this number jumped above what they were even a year ago. I believe we can, again, contribute this to the tax credit. When supply goes up, prices typically go down. The good news is that this inventory should be eaten up at with the tax credit buyers. This happened late last year in the last month of the tax credit. Let’s hope this is the case, because if a lot of inventory is left on the books, prices will fall more significantly than otherwise.

“INTENDED DEMAND” or pendings is next. This measures how many homes were sold but not settled in April. As you can see this number jumped dramatically. The 5 year trend typically sees about a 10% increase from March to April. This year it saw about a 30% increase! That’s pretty significant, especially considering that May should be even more dramatic. We could even see that number go way above the 5 year trend. Again, this is all driven by the government subsidies and aid of the tax credit.

Last is the “AVERAGE SOLD PRICE”. This one surprised me. Seasonally we see a bit of an increase, maybe a 5%-6% increase over March. This year it was more around the 10% mark.This is a clear indication that homes above the $300k mark are moving, not just first time home buyer homes. We have been watching this segment of the market since the beginning of the year and noticing an increase in confidence. This is also helped by the tax credit, but to a lesser degree than the first time home buyer. If this trend can keep up, which we believe it will, it will mean good news to those who have been thinking of selling their homes in the $300k – $700k. We feel that in the next 3 – 6 months, we will see a lot of “Move Up Buyer” homes selling as the seller’s of first time home buyer homes become buyer’s of move up homes. The Average Sold Pirce will be a telling sign of where the activity in the market is.

What does this mean?

For Seller’s: If you are a “Move Up” seller, meaning you have a home that would sell to a first time home buyer, in the $300k range or under, I have to say that you have missed the boat. The tax credit is over and it may be another 18 – 24 months before you can the type of money for your home as you could have in the first half of this year. If you have a home that is a “Move up” home, meaning it is in the $300k- $700k range and you have been thinking of moving on or need to relocate, now is the time. That market is going to be flooded very shortly with buyers that need to buy. And as always, if you must sell for either reason of relocation, hardship or otherwise, please contact us immediately and we can show you why more than 50 client’s have choosen the Chris and Caleb Real Estate Team for their Chester County Real Estate needs.

For Buyer’s: As a buyer, there is both good and bad news. You have missed the tax credit, but the good news is that prices will adjust and you will have less competition in the market. Interest rates are still historically low, just above 5%, but will not remain there. Now is the time to buy. And if you have a home to sell, as a “Move Up Buyer”, give us a call now, so that we can help you determine the best next step for you and your family.