Weekly Observation for September 5, 2009
September 5th, 2009The official numbers are not in yet to The Capital Area Association of Realtors MLS, however you can rest assured the month of August finished up over last August. This gives the local market a third straight month of year over year increases.
Here’s what has been reported as of the end of business on Friday. Three hundred seventy closed home sales up 24 from 346 in August of ‘08, a 6.9% increase. Although the 495 new listings added by Realtors in August were down 30 from 525 in August of ‘08, the rate of decline at 5.7% is the first month in single digits. The median sale price declined for the first time in months down $2250 to $110,000 or by 2%. Conversely the average sale price increased for the first time in months by $863 to $126,726 or by six tenths of a percent. The number of homes going under contract was up by 13 to 399 or by 3.4%.
Through the first eight months of 2009 the number of new listings taken by Realtors declined by 632 to 3676 from 4308, or by 14.6%. The 2405 closed home sales was down by 72 from 2477 in ‘08 or by 3%. The median sale price is up 4.76% to $110,000 from $105,000 and the average sale price is down 1% to $126,321. The number of homes going under contract is up fractionally from 3131 to 3164.
One may ask how the median sale price can be up and the average sale price be down? It’s simple, the demand for lower priced homes, being driven by the $8,000 federal tax credit, is up. The demand for higher priced homes is down. This has resulted in driving up prices in the lower price brackets due to increased demand, and driving down prices in the higher priced brackets due to weaker demand.
Here’s some examples, through September 4, homes in the $75,000 to $100,000 price range have 422 sold with 237 available for sale. This translates into a 4.5 month supply of homes for sale which would be considered a sellers market. Compare that to homes priced $400,000 and higher. There have been 41 sold while 87 remain available for sale. This translates into over a 17 month supply of homes for sale, which would be considered a buyers market.
The summertime burst in sales activity is mostly taking place for homes under $200,000, with 2069 closed sales and 1244 homes listed for sale, translating into a little less than a five month supply. There’s quite a contrast for homes priced over $200,000 with 360 having closed while 395 remain available for sale translating into an over eight months supply. Is the market good or bad? Depends upon whether or not your home has sold this year. If the value of your home is under $200,000 the odds of selling are good, if your home is over $200,000 the odds are not as good.
What does all this mean? It means Springfield once again proves its resiliency and has avoided a collapse in the housing market that has impacted most of the nation, and the state. Thank goodness for the tax credit and historically low interest rates, together they have increased demand. The number of home sales is down but has improved significantly from an uncommonly slow spring market.
The question becomes why has Springfield fared so much better than other markets who also have the same tax credit and interest rates available? Affordability is one key factor, the other is unemployment. Springfield enjoys the second lowest unemployment rate in the state at 7.4%. Proof of my assertion that jobs is the key to home sales, now and in the future.
What can we expect moving forward? The tax credit expires December 1, 2009. This means you must close on the purchase of a home, first time home buyers, by November 30. There’s hope the tax credit will be extended, however it is far from a sure thing. The nation’s appetite for deficit spending may not be there for congress to pass an extension.
The other half of the equation, interest rates, continues to hold steady around the 5% mark. Speaking with a leading mortgage expert this week, I asked when they thought rates would go up. They said when the federal reserve stops buying treasury notes and the treasury market turns to investors. They didn’t know when that may happen, but when it does they feel confident rates will go up fast. How high? Don’t know.
The housing market will get real interesting when the tax credit expires and interest rates go up. Not interesting in a good way, because historically when interest rates go up, the number of sales declines along with home prices. For the bazillionth time this year I am going to advise anyone looking to sell a home, or to buy a home, to get with the program! You don’t want to be kicking yourself for missing this opportunity. It may literally be a once in a lifetime opportunity for most folks.
Make this a Great week, and Happy Labor Day weekend from Fritz and Kristie Pfister and The Pfister Success Team Inc. of RE/MAX Professionals of Springfield. Thinking of selling your home while the opportunity is here? Call 652-7653. Our selling systems have helped 760 home sellers get sold since forming our team in 2000. That’s 195 more than any other agent or team in the MLS. Proven systems, consistent results. Call 652-sold when you want to sell.
The opinions expressed are solely those of Fritz Pfister, and not RE/MAX Professionals of Springfield or RE/MAX International.
