Sal Sedita

Mid Year 2008 Review - Kent County, DE Housing Market

Housing activity (chart 1) showed continued weakness as the number of sales declined 27% to 737 units as compared to the prior year to date total of 1010. The number of properties available for sale has increased by 12.7% to 2,011 but is slightly below the peak of 2,023 reached in May 2008. Pricing indicators show the year to date median sales price has declined 4.4% to $215,000 from $225,000 a year ago. The 7% decline in the average sales price is indicative of the change in the mix of properties that have sold; 71% of the properties sold to date in 2008 are priced below $250,000 compared to 63% this time last year. 

The days on market until a property is sold has increased to 86 days as compared to 71 days last year. And with the rise in inventory of 12.7% in comparison to last year, homes are selling with further reductions from their original list or asking price as motivated sellers attempt to find the “new market price” for their property – that is, the price a willing and able buyer will pay today. 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.

Are there any signs of improvement? Looking at three housing market indicators on a monthly basis – the number of new listings coming 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 – there appears to be continued softness.

For the first six months of 2008 there is a slight drop of less than 1% in the number of newly listed properties (chart 2) when compared to the same time period last year – not much of a sign of improvement.  And, the average time on market prior to sale has increased over the last few months as well (chart 3). Lastly, the sold price as a percentage of original list price has further declined over the past three months, it has moved to 93% from 94% (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.

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)