Suburban Philadelphia Real Estate News

Signs of Spring in the Suburban Philadelphia Delaware County Luxury Market? - Not quite yet.

After suffering the financial jolt that really took hold in October last year, it was expected that we would begin to see some clarity as the new administration arrived with fresh faces and new ideas.  Despite having since November to prepare, this clearly has not happened.  This has resulted in a falling financial market, a continued decline in consumer confidence, and no real apparent progress.  Until Washington shows more leadership, the luxury real estate market in particular will probably remain in the doldrums.

The Numbers: In 2008, there were a total of 93 luxury homes sold that settled for $1,000,000 or above in Delaware County Pennsylvania for an average price of $1,585,000.  Only 12 of these home sales occurred in the last quarter of 2008 after the financial markets began to deteriorate.  Since the beginning of 2009, although we expected to see an uptick in activity, we have only had 4 additional home sale settlements.

 As for Pending properties, there are currently 16 homes under contract with an average list price of $1,559,000.  Of these, ten were under contract prior to October 1 and all ten are new construction homes scheduled to close at various points into 2010.  Of the remaining six homes, four received contracts in 2009.  In a key shift away from new construction, five of these 6 properties were existing homes.  Based on the 4 settlements above and 5 additional properties scheduled to close before the end of March, we are looking at 9 total sales in the first quarter 2009 vs 18 sales in the first quarter of 2008 - down 50%

Today there remain 156 homes currently listed on the market with an average price of $1,756,000.  These homes have an average of 199 days on the market, up slightly from 195 in the December update.  Based on the current sales pattern, we have well over a years' worth of inventory on the market.

The Bottom Line: As I mentioned in my last luxury update, we are well below a "normal" sales rate, and as a result there must be rising pent up demand.  The problem remains, however, that with the current financial uncertainties overhanging the market, there is no real catalyst to encourage people to make a move now.  Without some clear direction, people will tend to hold off on making major decisions.  With the large existing inventory, this could lead to additional price deterioration in the near-mid term, but this could also change quickly depending on the moves coming out of Washington.  At this time the market remains basically in a holding pattern.

(All information is from the TrendMLS System and is believed accurate but not guaranteed)

The last post on pricing, sales activity, and overall trends in Delaware County, PA raised the question of whether we were seeing the same trends region wide.  

Short answer: Yes.

In New Castle County, Delaware, there were $74 Million dollars worth of properties sold in November consisting of 302 properties with an average price of $245,000 per the TrendMLS system market statistics.   Compared to earlier sales:

   Nov sales were down 38% from the 2008 avg sales thru Oct
   Nov sales were down 51% from the 2007 average sales/month
   Nov sales were down 69% from peak sales rate in June 2006

We saw close to the same sales rate($76 Million) in January 2008.  Prior to this, you would need to go back to Feb 2002 to see a lower sales volume. 

On a more local level, if you look at the Hockessin/Centreville/Greenville area, there are currently160 homes on the market with an average monthly sales rate of 18 units (dropped to 14 in November).  At this monthly rate, it will take over 8 months to sell out of the current inventory - assuming we recover toward the monthly average sales rate.

In Chester County, PA, total sales were $101 Million consisting of 295 units with an average price of $344,000.  Compared to earlier sales:

   Nov sales were down 34% from the 2008 average thru Oct
   Nov sales were down 45% from the 2007 average
   Nov sales were down 69% from the June 2005 peak.

Echoing New Castle County, sales were actually lower in January of this year at $95 Million.  Prior to January, we last saw this sales volume in February 2001.

Bottom line: We do seem to be seeing the same trends throughout the region. 

Again, once financing issues resolve themselves and people can have some confidence on the future rates and programs, we could see a rapid build up in activity as the market responds to pent up demand.  Both the time to resolve the financing issues and the increase/decrease in inventory on the market will dictate the direction of prices once sales pick up, but at this point pricing seems to be holding up reasonably well.

As I mentioned earlier, if you are thinking of buying or selling in the near term, now is the time to get ready.  I would expect the new administration to act fairly quickly once in office and you should be prepared to take advantage of any new opportunities as they appear.

As always, if you need any additional information or have any comments, please feel free to contact me anytime.

(All statistics from TrendMLS Market Statistics and believed accurate but not guaranteed)