The Housing Report NEW CASTLE COUNTY, DE: FIRST QUARTER 2011 Powered by Patterson-Schwartz Research Center
____
www.pattersonschwartz.com www.facebook.com/pattersonschwartz
____
1st Quarter Overview The 2011 1st quarter decline in the housing numbers compared to 1st quarter of 2010 came as no surprise given the impact on buyer demand of the pending expiration of the home buyer tax credit last year. The 1st quarter of 2011 ended with a decrease of 4% in the number of sold properties, and an 8% decline in the number of properties that went under contract compared to this time last year. In addition, average home prices declined by 5%, and the number of homes for sale remained unchanged.
Distressed sales; properties that sold that were either foreclosure, bank owned or short sale listings, represented 26% of the home sale activity for the 1st quarter of 2011 vs. 19% for the same time period in 2010. Further, distressed sales significantly affected the year-over-year change in home prices, selling at an average of 82% of list price, vs. non-distressed home sales averaging 91% of list price. New Castle County will continue to experience this drag on home prices as 19% of the homes for sale on the market are distressed home listings.
www.facebook.com/pattersonschwartz www.pattersonschwartz.com
Market Overview Looking at the local markets within New Castle County provides us with further insight. No doubt homes prices overall continue to face downward pressures, in addition though, the areas with the highest percentage of distressed home sales experienced greater pricing declines. A Look at the Local Markets Year to Date at March 31 All New Castle County AREA Brandywine Wilmington Hockessin/Greenville/Centerville Pike Creek/Elsmere/Newport New Castle/Red Lion/Delaware City Newark/Glasgow South of Canal
Median Price of Sold Properties 2011 2010 % Change
Number of Sold Properties 2011 2010 % Change
$190,500
$210,000
-9%
809
846
-4%
$249,950 $72,950 $415,000 $185,000 $135,000 $195,000 $265,000
$250,000 $129,900 $515,000 $199,500 $164,900 $215,000 $275,100
0% -44% -19% -7% -18% -9% -4%
143 139 35 88 89 233 82
131 143 46 109 97 237 83
9% -3% -24% -19% -8% -2% -1%
The Wilmington market, where distressed properties represented 43% of the home sales experienced a 44% decline in median homes prices for the 1st quarter of 2011. Whereas, the Brandywine area with distressed homes representing 9% of total homes sold saw home prices unchanged from the 1st quarter of 2010. A Look at the Local Markets Year to Date at March 31 All New Castle County AREA Brandywine Wilmington Hockessin/Greenville/Centerville Pike Creek/Elsmere/Newport New Castle/Red Lion/Delaware City Newark/Glasgow South of Canal
Distressed Properties - % of Solds 2011 2010 % Change 26%
19%
37%
9% 43% 14% 23% 30% 29% 37%
15% 34% 13% 16% 20% 22% 36%
-40% 26% 8% 44% 50% 32% 3%
Supply vs. Demand Market conditions vary within our geographic area and also within price points. A good barometer of market conditions, months of inventory indicates how long it will take to sell the existing supply of homes at the current sales rate. Generally speaking, in a balanced market there is approximately five to six months’ supply of inventory. A supply of less than five to six months generally favors sellers; there are more buyers in the market than homes for sale. Above that level, market conditions may be more favorable for buyers; there are more homes for sale than there are willing and able purchasers. Overall, in New Castle County, months’ of inventory stands at 8.9 months at the end of March 2011 compared to 7.4 this time last year. As a potential home buyer, you can gain an understanding of today’s market by taking the pulse of the area and price range in which you would like to purchase.
www.facebook.com/pattersonschwartz www.pattersonschwartz.com
Market Barometers In addition to supply and demand, economists follow three other housing market indicators to assess the direction and overall health of the market: the number of new listings coming on the market; the average number of days it takes a home to sell; and the sales price as a percentage of the original list or “asking price.�
NEW LISTING ACTIVITY BY MONTH
For the first three months of 2011, there is a 16% decline in the number of newly listed properties when compared to this time last year. This helps with absorption of existing homes for sale.
DAYS ON MARKET BY MONTH
The average days on market prior to sale has trended upward since the beginning of the year and stands at 100 days vs. 86 days this time last year.
Market Barometers (continued) PERCENTAGE LIST TO SALE BY MONTH Homes are selling with reductions from the original list price often referred to as “listing discount�. Here again the effect of distressed sales on the market is evident - overall for the 1st quarter of 2011, distressed properties received 82% of asking price whereas non-distressed properties obtained 91% of asking pricing.
NEW CONTRACT ACTIVITY BY MONTH
Overall, new contract activity for the 1st quarter is 8% below that of last year when buyers were seeking to take advantage of the home buyer tax credit that expired on April 30, 2010 and low mortgage rates.
www.facebook.com/pattersonschwartz www.pattersonschwartz.com
Understanding The Numbers ... Looking at the housing numbers to date for 2011 in comparison to the 1st quarter of 2010 indicate that there are signs of continued weakening in our local housing markets. While the numbers are what they are, putting them in context with what was going on in the early part of 2010 provides the total picture. The first four months of 2010 saw a substantial surge in home sales spurred by the pending expiration of the home buyer tax credit. After its April 30th expiration the market momentum dropped and along with it home sales. In essence, demand was pulled into the first four months of 2010 such that data comparisons are somewhat misleading. We do expect that sales over the next few months will continue to be down in comparison to 2010 and then somewhat stronger, although year-over-year overall sales are projected to be under 2010. That said, there are opportunities in every market cycle - if your personal situation affords you with the ability to see past the clouds we welcome the prospect of working with you to successfully navigate a real estate transaction in today’s environment. (All reports presented are based on data supplied by TReND MLS. TReND MLS does not guarantee nor is it responsible for its accuracy. Data maintained by the MLS may not reflect all real estate activities in the market. Information is deemed reliable but not guaranteed. Data is as of 4/27/2011)
The Housing Report NEW CASTLE COUNTY, DE: FIRST QUARTER 2011
Powered by Patterson-Schwartz Research Center