Sal Sedita

Mid Year 2008 Review - New Castle County, DE Housing Market

The Housing Market (chart 1) showed continued weakness in the second quarter, as the number of sales declined 30% (to 2,495 units) compared to the prior year-to-date total of 3,566. The number of properties available for sale increased by 8% year over year (to 4,095), but is slightly below the peak of 4,100+ reached in October 2007. Pricing indicators remain stable: the year-to-date median sales price is $232,000, essentially unchanged from the prior year, though down 1% from the 2007 year-end median of $235,000. The mix of properties that have sold year-to-date as compared to last year-to-date is similar, as indicated by the nominal change in average sales price. 

The days on market until a property is sold has increased to 71 days, compared to 51 days last year. Coupled with the 8% rise in inventory, our data shows that homes are selling only with further reductions from the original list or asking price, as motivated sellers seek the “new market price” for their properties. Our experience over the past six 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 signs that savvy sellers are aggressively challenging their competition, which in turn will further energize and stimulate the market.

For the first six months of 2008 there is a notable drop of 12% in the number of newly listed properties (chart 2), compared to the same time period last year – the first indication of some improvement in our local housing market. Although the year-to-date average time on market prior to sale has increased, there are early signs of this beginning to improve in the month-to-month data (chart 3). Lastly, there has been improvement in the “sold price” as a percentage of original list price; over the past three months it has inched up to 94% from 93% (chart 4). This tells us that sellers are pricing their properties more appropriately for this market; buyers perceive the value, and therefore see less need for price negotiation.

There is a saying that “timing is everything” – yet attempting to wait for prices to hit the so-called bottom is even trickier in housing than the stock market. As a buyer, you might get the timing right on price, but when you seek financing, interest rates may well have increased. The end result - waiting to buy could work against you. You may actually end up paying more over time, with higher monthly mortgage payments than if you had purchased now.

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 7/15/08)