STEVE RYBACHAK

3rd Quarter 2008 Review - Cecil County, MD Housing Market

The Housing Market ended the third quarter with a decline of 25% year-to-date in the number of sales (to 605 units) compared to the prior year-to-date total of 812. The number of properties available for sale has increased by 7.2% to 1,162.  Pricing indicators (chart 1) show the median sales price declined 7% in September 2008 to $227,250 compared to $245,000 in September 2007.  Similarly the average sales price declined 11%, from $276,552 to $245,959.
 
The days on market until a property is sold has increased to 185 days versus 122 days last September.  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. To energize this market, a motivated seller must aggressively price their property in relation to comparable homes in the area and showcase it with strong curb appeal - this in turn will stimulate buyer interest and activity.

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 average sold price as a percentage of average list price –  all confirm that the market is showing the continued stress of our weakening economy and tighter credit.

For the first nine months of 2008, the number of new listings has decreased 12% (chart 2) compared to the same time period last year – fewer properties entering the market is a  positive trend for the overall absorption rate of homes for sale. Homeowners who have no urgency to sell are reluctant to list their properties until economic conditions improve. The average time on market prior to sale, has increased in comparison to last year and last quarter as well (chart 3). Finally, the average sold price as a percentage of average list price has declined in comparison to last year, with the past six months’ data showing a fair amount of volatility (chart 4).  This decline, coupled with the increase in days on market, directly correlates with the rise in the number of homes for sale. That is, there are more choices for buyers, more competition for sellers and more price negotiation.

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 MRIS. MRIS 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)