Sal Sedita

First-Quarter 2010 Review - New Castle County, DE Housing Market

Despite the disruption in business caused by our record snowfall this past winter, the 1^st quarter of 2010 ended with an increase of 4% in the number of sold properties compared to this time last year. In addition, 11% more properties went under contract in the first quarter of 2010 than in the same quarter last year. Home prices have declined slightly (less than 2%), and the number of homes for sale has declined 2% (chart 1).  Buyers have begun to return to the market taking advantage of the affordable supply of homes for sale, low mortgage rates, and the extension and expansion of the home buyer tax credit.

MARKET OVERVIEW

Looking at the local markets within New Castle County provides us with further insight. Pricing declines range from just about 2% in the Brandywine area to nearly 17% in the Wilmington market. With the exception of Brandywine and Pike Creek, the area experienced an increase in sales as a result of these pricing adjustments. Although the Hockessin/Greenville/Centerville market shows a 50% increase in average sales price, this is the result of four high end properties that sold with an average sales price of $2.4 million compared to two high end properties last year with an average sales price of $1.6 million. With so few transactions in this area the data is easily skewed by high dollar transactions such as these (chart 2).

SUPPLY vs. DEMAND

Market conditions vary within our geographic area and also within price points. In New Castle County, the number of homes for sale priced below $300,000 lean more toward a balanced market measured by months’ of inventory. 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. 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 (chart 3) .

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.”  

For the first three months of 2010, there is a 7% increase in the number of newly listed properties (chart 4) when compared to this time last year.

The average days on market prior to sale (chart 5) remained unchanged from this time last year and hovers between 80 and 90 days from month to month.

Finally, homes are selling with reductions from the original list price often referred to as “listing discount” (chart 6). The stabilization of this indicator from last year suggests that sellers are listening to the market when setting their list price; there is less of a gap between buyer and seller during price negotiation.

Buyers have returned to the market – as listing prices have declined, sales have increased (chart 7).  March 2010 saw a 35% increase in new contract activity compared to March 2009; buyers are likely seeking to take advantage of the home buyer tax credit that expires on April 30, 2010 and low mortgage rates that are expected to rise to 6% by year end.

Overall these indicators point to the expected slow recovery of our local housing market. If you are a seller, setting a realistic list price for your property is critical to a sale in today’s environment. If you plan to purchase a home, know that mortgage rates are expected to rise so waiting for prices to fall may end up costing you more.
 
At Patterson-Schwartz, we have helped people buy and sell in every kind of market. We welcome the opportunity to provide you with the guidance and strategy necessary 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 4/13/2010)