After months of nothing but negative news in the real estate market, the first 14 days of April have brought us some news that is not totally negative. This is what it has come to, new is that not totally negative is now good.
Although the closed sales of single family homes and condominiums still lag the figures from the sale time last year, 27% and 46% respectively, the new sales of single family homes in Monmouth County, those reported under contract for the month, are about the same as last year. Keep in mind last year was bad, so to say it hasn't gotten worse in the first 14 days of the month isn't saying much, but it's better than it's been for the first 90 days of the year. Also keep in mind that 14 days does not make a trend and the new sales of condos is still running 30% behind the first 14 days of April 2008.
People continually ask us if things are getting "better". By "better" most are asking about what the prices are doing. The short answer is they are still going down. People want to know when they will stabilize. They won't stabilize until sales improve to soak up the excess inventory that is putting the negative pressure on prices. Before sales can improve, the have to stop going down. The first 14 days of April, at least as it applies to single family homes, gives us a glimmer of hope that the sales may, and I say may, be bottoming out.
Once they bottom out, they won't necessarily start to improve but at least it is a step in the right direction. We will see what the rest of the month as to hold and then see what May, June and July have to offer. Keep in mind that a modest increase in sales will not fix the problem. The oversupply relative to demand is so great that sales will have to improve significantly to reach a point of price stability. But we have to start somewhere, and maybe this is the start.
Only time will tell. Keep your fingers crossed.
Showing posts with label closed sales. Show all posts
Showing posts with label closed sales. Show all posts
Wednesday, April 15, 2009
Saturday, November 29, 2008
Weakening Economy Takes It's Toll On The Real Estate Market
With the month of November at an end, the effects of the weakening economy on the already weak real estate market are becoming more evident, and the impact has been negative. For November, the closings of single family homes declined from 357 in 2007 to 232 this year. That is a decline of 35%. For the year, sales of single family homes around the county have been off by about 21% on a year to year basis, so the November numbers show a further weakening of the real estate market.
Closed sales are a trailing indicator of real estate activity because the closed numbers reflect deals that were actually struck 30, 60 or 90 days earlier. New contracts, called pending sales, is a more current indicator of sales activity, so let's take a look at those numbers. In November 2007 there were 352 pending sales reported in Monmouth County as compared to 245 for November 2008. That represents a decline of 31% year to year. That is not as bad as the closing figures, but still represents clear evidence that the weakening economy is having a negative effect on the local real estate market.
What does all this mean and what can we expect as we move into 2009. Sadly, there is no evidence that the real estate market is showing signs of improvement. The oversupply of housing, relative to demand, is the highest it's been this decade. Because of this, it is likely that prices will continue to decline well into 2009, at the very least. Will there be more buyers in the Spring? Yes there will. But those buyers will likely be buying at lower prices than we see today. What to do?
If you are a seller, time is of the essence. You find yourself in a race against time for every day that your house doesn't sell means you are likely to get less money when it does. We have many clients that tell us they "aren't in a hurry" or "we don't have to sell" or "we don't have a gun to our head". Those people will probably wish they had been in a hurry. If you are a seller and want to attract the next buyer for your type of house, make sure you offer the best value based on the asking price. You have to price your house to stand out from the competition. You must make your home a "no brainer" in the mind of a buyer. As we advise our clients, this is a market that requires a strong stomach and bold action. This is not a market for half hearted sellers.
If you are a buyer, you should only pursue those homes that meet your lifestyle needs and are absolutely the best value, based on the asking price. Since prices are likely to decline again next year, you should only buy if you plan to be in the home at least five years. If you only see yourself in the home for a period less than that, you should not buy! This is a market that does require a buyer have faith that prices will stabilize and once again go up. Though we don't have these markets often, they do test one's faith in the future.
Closed sales are a trailing indicator of real estate activity because the closed numbers reflect deals that were actually struck 30, 60 or 90 days earlier. New contracts, called pending sales, is a more current indicator of sales activity, so let's take a look at those numbers. In November 2007 there were 352 pending sales reported in Monmouth County as compared to 245 for November 2008. That represents a decline of 31% year to year. That is not as bad as the closing figures, but still represents clear evidence that the weakening economy is having a negative effect on the local real estate market.
What does all this mean and what can we expect as we move into 2009. Sadly, there is no evidence that the real estate market is showing signs of improvement. The oversupply of housing, relative to demand, is the highest it's been this decade. Because of this, it is likely that prices will continue to decline well into 2009, at the very least. Will there be more buyers in the Spring? Yes there will. But those buyers will likely be buying at lower prices than we see today. What to do?
If you are a seller, time is of the essence. You find yourself in a race against time for every day that your house doesn't sell means you are likely to get less money when it does. We have many clients that tell us they "aren't in a hurry" or "we don't have to sell" or "we don't have a gun to our head". Those people will probably wish they had been in a hurry. If you are a seller and want to attract the next buyer for your type of house, make sure you offer the best value based on the asking price. You have to price your house to stand out from the competition. You must make your home a "no brainer" in the mind of a buyer. As we advise our clients, this is a market that requires a strong stomach and bold action. This is not a market for half hearted sellers.
If you are a buyer, you should only pursue those homes that meet your lifestyle needs and are absolutely the best value, based on the asking price. Since prices are likely to decline again next year, you should only buy if you plan to be in the home at least five years. If you only see yourself in the home for a period less than that, you should not buy! This is a market that does require a buyer have faith that prices will stabilize and once again go up. Though we don't have these markets often, they do test one's faith in the future.
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