Here is the newest edition of our LowryTeam.com Monthly Real Estate Trends Report for May 2011. This report, published monthly, provides a look back at the last six months worth of real estate data for West Chester, Beckett Ridge and Liberty Township, Ohio. It is a local trends report and makes no attempt to draw overall conclusions or make predictions for the larger real estate market. In fact we believe that anyone that makes an attempt to predict future, national real estate market conditions or draws conclusions on recent historical data nationally is just out of touch with reality. There is no such thing as a national weather forecast and there is no such thing as a real estate one either. ALL real estate is local!
The source of our data is the Greater Cincinnati Multiple Listing Service. By seeking out and understanding the trends in our market place we are better able to forecast the upcoming market conditions and counsel our clients on pricing strategies to get their home sold for the highest possible price. Any thoughts and insight into what may occur in the future are solely our opinions and forecasts.
The first thing we look at is unit sales for the last six months (December – May):
It’s all about the sales numbers right now:
As we move towards the end of June and look back at this most recent six months of data, the trend that we see is a continued softening in unit sales. The graph shows very little of what we might have typically called the spring market. Sales are down pretty dramatically when compared to the same months last year. The reason for this is the Homebuyer Tax Credits that were in place last year, which really propped up the home sales in the first half of the year.
May 2011 homes sales showed a very small uptick in sales when compared to the months of March and April 2011. May 2011 sales were 35.16% lower than May of 2010. So the year over year comparison of sales does not look good. Again, some of this is due to comparisons to the tax credit months, but home sales clearly remain at very low levels, with no visible signs of improvement in the near future.
Everything hinges right now on home sales. Home prices will not be able to show any stability in the foreseeable future with the amount of inventory (homes for sale) that we currently have on the market for sale vs. the number of homes that are actually selling. We have a large oversupply of homes for sale in West Chester and Liberty Township and this only puts further pressure on listing and sale prices. We believe that the home values will continue to fall. For homeowners needing to sell, the best chance to get the highest price for their home is to get the home sold in the very near term. It truly is all about the home sales numbers right now!
Average sale price for the last six months (December – May) is next:
In this graph you can see the movement of the average sale price for West Chester and Liberty Township, Ohio real estate sales from January 2010 through May of 2011. The trend line continues to show you a gradual decline for average home sale prices. Average sale price gets quite a bit of attention in the media with reports that quote “home prices fell” or “home prices rose” in this particular quarter or month or whatever. The average sale price is nothing more than what it’s called – an average price of all of the homes sold in a particular time frame.
However, just to be clear here, homes are not worth more now than they were at the beginning of the year. Any increase or decrease in the average sale price is reflective of the activity of that time frame not the exact value of any one home. Falling home values do clearly effect the average sale price, but that is not the whole story. The mix of homes and their values definitely play a part in this fluctuation, ie., many more lower priced homes selling than in the luxury market.
List to sale price ratio:
The List to Sale Price ratio is calculated by dividing the final sale price into the list price to find the percentage of the list price that a given home sells for. The West Chester and Liberty Township Ohio List to Sale Price Ratio is 95.66% for May 2011. As you can see the monthly List to Sale Price Ratio has seen some big swings up and down in the last year and we took another big drop down in February. The swings up and down are an indicator of the lack of stability in the West Chester and Liberty Township real estate market right now. The highlighted center area of the graph shows what appears to be the middle ground right now for the market.
The trend here had been on an upswing, indicating that homeowners are generally pricing their homes at levels that reflect market value. One important fact to keep in mind here is that these figures are calculated based on homes that have sold. Homes that are priced too high when listed will not get 95-96% of their list price, in fact in this market, they won’t sell at all.
Summary:
As we have stated previously in the LowryTeam.com: West Chester, Beckett Ridge and Liberty Township real estate market update, our market remains challenging, yet full of opportunity. Clearly the value of homes in the area has fallen over the past couple of years and frankly, the values are likely to fall farther. The primary threats or obstacles to the second half of 2011 real estate market and any potential recovery are continued high unemployment, a considerable oversupply of homes for sale and the potential loss of the mortgage interest tax deduction. Interest rates have settled back down and remain at very attractive levels around 4.5 – 4.75% which provide a great environment for buying a new home.
Your comments and questions are always welcome!