STEVE RYBACHAK

3rd Quarter 2008 Review - New Castle County, DE Housing Market

The Housing Market (chart 1) ended the third quarter with a decline of nearly 29% year-to-date in the number of sales (to 3,848 units) compared to the prior year-to-date total of 5,409. The number of properties available for sale decreased marginally year over year (to 4,139).  Pricing indicators are down slightly as well: the year-to-date median sales price is 235,000, 2% less than that of the prior year, though unchanged from the 2007 year-end median. The year-to-date average sales price is down less than 1% (to $263,455) from that of prior year as well.

The days on market until a property is sold has increased to 69 days, compared to 51 days last year.  Potential buyers are taking longer to make purchase decisions and have more property choices. As inventory rises, there is the expectation that there will be an increase in negotiability resulting in larger discounts from list price. Our data does confirm that homes are selling with further reductions from the original list or asking price, as motivated sellers seek the “new market price” for their properties. In addition, our experience over the past nine months consistently shows that a property that is priced correctly at the time it is listed will immediately attract attention and generate buyer interest.

Looking at three housing market indicators on a monthly basis – the number of new listings on the market, the average number of days it takes for a home to sell and the sold price as a percentage of the original list or “asking” price – the market is showing  the continued stress of our weakening economy and tighter credit.

For the first nine months of 2008 there is a notable drop of nearly 14% in the number of newly listed properties (chart 2), compared to the same time period last year – homeowners who have no urgency to sell appear reluctant to list their properties until economic conditions improve.  Looking at the month-to-month data, the year-to-date average time on market prior to sale began to show some early signs of improvement (chart 3) but moved upward with the economic news in September. Similarly, we saw a slight improvement in the “sold price” as a percentage of original list price in the 2nd quarter but that too has trended back to 93% (chart 4). The expansion of this indicator suggests that sellers have to come down further in their price to meet buyer expectations to enable a transaction to occur.

The weakening economy and tighter credit are key factors to the current housing market. Mortgage money is readily available within a changed lending environment that may require larger down payments, larger cash reserves, and tighter qualifying ratios. The turmoil in the financial markets leaves a potential buyer with a lot of information to process with the end result, a delayed purchasing decision.

If you are planning on buying a home, either as a first-time buyer or as a move-up buyer, focus on the opportunity you have today to find the home you really want, with access to financing with low interest rates, and be less concerned about a potential short-term decline in price. Over time, as in past real estate cycles, prices will rise again.

(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 11/11/08)