For some of us it may be a distant memory, for others it may be a regular occurrence: Do you remember your mid semester progress report? This is the real estate equivalent of that evaluation. We will have year end numbers in February, but the trend lines are rather clear. Let’s look at our review on three levels, national, state, and local:
National: Markets across the country are showing slow rates of sales, and lower prices. There are some hot markets although they are in the micro minority. The majority of metropolitan areas have more supply than demand. Jim Kramer and other Wall Street experts are suggesting the market is much worse than it is: Kramer: Over 1.25 trillion dollars of residential real estate are currently available in the United States. Perspective: Total value of residential real estate in the US is just over 20.1 Trillion dollars. So approximately 6% is currently on the market. Moreover, according to Fannie Mae, the total value of mortgages leveraged against that real estate is 11 Trillion dollars. Therefore, there is 9 Trillion dollars of net equity in US residential real Estate.
Finally, in 2007 approximately 5.7 million single family residences will be sold. This lines us with 2002 and would be the 5th highest level of sales since we began keeping records.
State: The end of the year will conclude with a reduction of sales of approximately 10% in single family sales, but an increase in condominium sales. In most statistical ways we are lining up with 2004. Average single family price in 2004 was $264700. It rose to a high of $282,900 in 2005. At the end of the 3rd quarter of 2007, median price was $279,900. Number of days on market is up to 84. The absorption rate, (that is the time it will take to sell all of the current listings, if no new listing come on, based on the current rate of sales-number of sales a month), is now at 11 months. A normal market in Rhode Island would have a 5 to 6 month supply. Additionally, there are a significant number of house that are coming off of the market because they have not sold in the past couple of years. The other fact is that the entry end and the upper ends of the market are healthy and active. The 500-800k range is more challenging. Economic indicators do offer some rays of encouragement over the long haul. The short course is steel and cold.
East Greenwich: This market is fascinating. First East Greenwich actually began to cool in early 2005 in terms of price and number of sales. Average price has dropped from $559500 to $522,500 as of 3rd quarter 2007. Time on market has increased from 67 days to 84 days (average). Yet sales increased from 48 in 2006 to 68 in 2007. Yes we have identified the price at which sales occur. There is a convergence of reasons for this activity: First people choose the best location and East Greenwich enjoys a strong location reputation. Secondly, East Greenwich is similar in terms of list price to alternative communities, so buyers are gravitating to stronger location at a similar price point. Third, East Greenwich enjoys strong relocation resale reputation. Transferees are being more prudent in their pursuit of shelter in Rhode Island. As the result more are buying in East Greenwich.
Conclusion: It is clearly a good time to buy a new home. Selection is generous, rates are historically low, and sellers are motivated. Please give us a call to help you find a great value! It is true that some sellers need to sell and will sell significantly below value.
It is, also true, that many sellers will sell at fair value, but will not give their homes away.
In short, the market and its value is stronger than the headlines would suggest. If you are a buyer who has been waiting on the fence, it is a great time to get off.
Ron Phipps, CRS, ePro, GRI
www.phippsrealty.com
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