Chester County Real Estate Statistics – December 2009
Chris’s Assessment
Supply and Demand are the key indicators for where a market is going. Consequently, those are the numbers I am always keeping an eye on to help me understand exactly what the market is doing. That is also why I name two of the key graphs Supply and Demand. After compiling the latest numbers for December for the Chester County area real estate market, here is what I see:
- Active Listings = SUPPLY: Supply is down. This is a very good indicator. In the first half of this year, the trends were following the same line as the previous year, and then the First Time Home Buyer tax credit really kicked in and helped to bring inventory down to more healthy levels. Starting in September the trend dropped below 2006 levels which is exciting. The BIG IF is if the market will continue to keep that trend. I believe it will, mostly due to the fact that the credit is still in effect. The biggest question is – What happens after April 30th? We will have to wait and see.
- Closed Sales = DEMAND: After rising to astronomical levels, the demand has dropped back to what I would call “normative” levels. Decembers levels were at the same level as they were in 2007. This is another healthy sign. To get back to a balanced market, the demand needs to be averaging between what it was in years 2006 and 2007. Again, I believe demand will be strong in the first half of the year due to the tax credit. Unemployment is another factor. If unemployment goes down in the area, and more people are finding jobs, this could really boost demand.
- Average Sales Price: After taking a HUGE nosedive in September through November, the average sales price is back up to “normative” levels. For December, it was about $380k, and as the chart points out, that is at a decent, expected level for December. All through out 2009, the average sale price was down a significant amount, which I contribute to the tax credit and so much uncertainty being present in the economy. Seller’s were being much more realistic about their prices either because they were forced to or from better advice. It is still fairly difficult to find some good first time home buyer homes in Chester County, unless you go Downingtown or west. The average sale price does need to come down a bit more, even now. I expect that to be the trend through out 2010, tracking at or below 2009 levels.
- List to Sale Price ratio: This data is good indication of where prices are heading and throughout 2009 the arrow was pointing down, with the ratio being at the lowest levels in 5 years. The trend does not indicate that this factor is going north yet. Given many other economic factors, I believe the data will continue to be around the same levels as the last two years, hovering between the 91% – 93% range. If it does start heading back into the 95%-96% range, then we know we are seeing more of a stabilizing of prices. As it is now, the price indicator seems to be pointing down.
Chris’s Advice:
- For Sellers: My advice has been and will continue to be this: If you don’t have to sell, then don’t – ESPECIALLY if you bought in the last 5 years and put a minimum amount down. You will almost certainly be loosing money if you sell. But if you are selling, for any reason, then make sure you get a VERY GOOD agent. And a good agent in this market will be doing a lot of business (I’ve sold 25 homes, the team I am on sold 80 homes), will have a quick “Days-On-Market” figure (ours is 45 days, which is half of what the average is) and clients that rave about them. I am more than willing to share references with you. Lastly, if you are considering, do it now, because come May 1st, chances are your house is going to be worth a good percentage less than it was on April 30th. Of course, this is due to the tax credit.
- Word of caution to home owners/ sellers that may be in distress: If you have found yourself falling behind or will soon be falling behind in your mortgage payment, PLEASE do yourself a favor and call your mortgage company ASAP. Many are willing to help you work something out. If you are considering doing a “Short Sale” – make sure you get ALL the facts. Short sales are not all they appear to be and many times, even though the bank says they are “Forgiving” the amount you are short, many times that amount shows up on your credit report as a Foreclosure, which is what many home owners/sellers are trying to avoid in the first place. Please call an agent who is certified to help sellers in distressed situations. It just so happens that the Seller specialist I work with is certified. Call me today to discuss.
- For Buyers: Interest rates are still low, though they have come up a bit. If you can buy, do it now and take advantage of the tax credit and low prices. Are you unsure of if you can buy? Then contact me and we can do a quick assessment over the phone of whether you are able to or not. Just call me at 484.995.9318.
