Sal Sedita

Mid Year 2008 Review - Southern Chester County, PA Housing Market

The Housing Market (chart 1) showed continued weakness in the second quarter, as the number of sales declined 24% (to 402 units) compared to the prior year-to-date total of 531. The number of properties available for sale decreased by 2.3% to 1047 compared to June 2007. Pricing indicators show the median sales price declined 10% in June 2008 ($358,000) compared to June 2007 ($398,000).  A further sign of the change in this area is the 8% decline in the average sales price, $416,000 year-to-date vs. $453,000 this time last year. 

The days on market until a property is sold has increased to 100 days, compared to 80 days last year. Coupled with the overall rise in inventory (though 2% less than the peak reached in June 2007), 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. 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 does 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, the number of new listings has decreased 10.8% (chart 2) compared to the same time period last year – the first indication of some improvement. The average time on market prior to sale, has increased in comparison to last year and has been fairly volatile over the past 3 months (chart 3)  - though with fewer than 500 transactions for our analysis, this is to be expected. Lastly, there has been some improvement in the “sold price” as a percentage of original list price over the past two months it has inched up to 94% from 93% (chart 4), though two months of data does not substantiate a trend upward.  All of the indicators correlate - an abundant supply of homes for sale provides 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 4/10/08. For analysis purposes, Southern Chester County includes Avondale Borough, Birmingham Twp, E. Marlborough Twp, E. Nottingham Twp, Elk Twp, Franklin Twp, Kennett Square Borough, Kennett Twp, L. Oxford Twp, London Britain Twp, London Grove Twp, New Garden Twp, New London Twp, Newlin Twp, Penn Twp, Pennsbury Twp, Pocopson Twp, U. Oxford Twp, W. Marlborough Twp, W. Nottingham Twp)