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Here is the newest edition of our LowryTeam.com Monthly Real Estate Trends Report for January 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.
First we take a look at unit sales for the last six months (July – December):
This most recent six months of data reflect the time immediately after the home buyer tax credit expiration. As you can see the drop in sales in this period was pretty dramatic. The tax credit had the impact of drawing a lot of home sales into the first six months of the year and causing an extensive slow down afterward. The graph shows that that there has been a leveling off of home sales in West Chester and Liberty Township during this last six months time frame.
To put these levels of home sales in proper perspective we can also compare them to the same time periods of the last two years. In the fall of last year (2009) we had just seen the extension of the original first time homebuyer tax credit. In the fall of 2008 we were in the midst of the financial crisis with the all of the bank failures, etc. which caused a very significant slow down at the time in home sales. So when you compare the last three year’s home sales for this time period of July – December you can see that our current level of home sales had been tracking at a level that was below the levels seen during the financial crisis, but in December moved upward slightly, basically pulling even with December 2008 and down 13.16% compared to home sales in December 2009.
This continues to be a pretty amazing statistic when you consider that we are operating in an environment of both extremely low interest rates and home prices. One factor that may provide an uptick of some sort in home sales in the near term is rising interest rates. Rates have definitely risen off of their lowest levels and history tells us that when rates go up, they tend to go up fast. Some homebuyers may be fearful of missing out on these really low rates and will jump into the market to get a home under contract while the below 5.00% interest rates are still available. This could result in a small upward trend for home sales in the next few months over the current levels.
Average sale price for the last six months (July – December) 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 in 2010. If you watch the trend line you can see a gradual decline for 2010. 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.
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. A perfect example of this is the month of August which according to the graph shows a huge increase in the average sale price over the month of July. A look inside the numbers explains… In July, 17 of the total 82 closed sales that month were under $140,000 in sale price, in August there were only 6 of a total 78 closed sales in that same price range. Less sales in the lower price ranges will cause the average sale price to be higher. In addition, in July there were just 4 closed sales over $400,000 compared to 9 closed sales in August over $400,000. So, was the average sale price higher because homes were worth more? No, there was just a very different mix of homes that sold.
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 95.68% for the six month period of July – December 2010. As you can see the monthly List to Sale Price Ratio has seen some big swings up and down in the last year. 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 previous two months had been below this range, indicating that homeowners are accepting lower offers when compared to their list prices than had been the case in previous months. In December the list to sale price ratio for West Chester & Liberty Township move back up into the middle of the middle ground so to speak.
The one factor that remains true, through all of the market’s ups and downs is that homes that sell quickly, sell for a much higher percentage of their list price. In the most recent six months, homes that sold in the first thirty days that they were on the market sold for 97.35% of list price. As you can see, this is a much higher final sales price compared to the overall market average.
Summary:
As was stated in last month’s LowryTeam.com: West Chester, Beckett Ridge and Liberty Township real estate market update, the 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, in certain price ranges, the values are likely to fall farther. The primary threats to the 2011 real estate market and any potential recovery are continued high unemployment and the potential loss of the mortgage interest tax deduction. Interest rates have now risen off of their lows, but still remain at very attractive levels below 5.00% which provide a great environment for buying a new home.
