DAVID HARRELL

3rd Quarter 2008 Review - Kent County, DE Housing Market

Housing activity (chart 1) ended the third quarter with a decline of nearly 30% to 1006 units as compared to the prior year to date total of 1431. The number of properties available for sale has increased by 9% to a peak of 2,072. Pricing indicators show the year to date median sales price has declined nearly 5% to $217,200 from $228,000 a year ago. The year-to-date average sales price is down 6.5% (to $224,950) as well.

The days on market until a property is sold has increased to 85 days as compared to 69 days last year. And with the rise in inventory of 9.3% 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.

 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 – the market is showing the continued effects of our weakening economy and tighter credit.

For the first nine months of 2008 there is a decline of  about 5% in the number of newly listed properties (chart 2) when compared to the same time period last year – homeowners who have no urgency to sell appear reluctant to list their properties until economic conditions improve.  This decline is considered a positive trend; a lower number of properties coming on the market will not add as much to the growing inventory of homes for sale. The average time on market prior to sale has decreased slightly over the last few months although well above that of prior year (chart 3). Lastly, the sold price as a percentage of original list price has hovered around 93% to 94%  over the past three months, again well below that of prior year at 96% (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 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 11/11/08)