Much has been reported in the last few weeks about the strong numbers in the national real estate market. The news has been encouraging indeed. Since real estate markets are local, I thought it would be interesting and important to know how our market in Chester County PA is doing compared to the rest of the nation.
So, is there a real estate market recovery underway in Chester County, Pennsylvania?
Well, maybe... Here's why:
The National Association of Realtors reported a sales surge of 11% from May to June 2009.
It was reported nationally last week that home sales surged approximately 11% from May to June of 2009. According to TReND MLS data, the number of single family home sales settled Chester County rose from 323 units to 489 units from May to June 2009. This is a whopping increase of 51.4%. The average sold unit increase from May to June yearly in Chester County since 2000 has been approximately 37%. This statistic indicates that more home sales settled in the May-June timeframe than the national average by almost 40%. Current local home sales settled surpassed our local average by almost 20%. Year-over-Year sales in 2009 fell more than 10% from 2008. Nevertheless, a 51.4% sales surge from May to June 2009 is a very good thing!
Pending Sales Rise for 5 Consecutive Months
The National Association of Realtors reported earlier this week that pending sales have risen on the national level for 5 consecutive months. They reported that we have not experienced a 5 month consecutive increase in pending sales since July 2003. According to TReND MLS data, Chester County typically and consistently experiences 3 or 4 consecutive months of pending sales growth each year since 2000. January through June 2009 is the first time we've seen 5 consecutive months of local pending sales growth since 2000. Even more importantly, pending sales growth climbed to within .6% if prior year in May and jumped to an astronomical increase of 16.8% over prior year in June 2009. This is the first time pending sales has outperformed prior year pending sales since July 2007 and only the second time since December 2006. Furthermore, June 09 outperformance was huge compared to 1.0% and 3.8% in 7/07 and 12/06 respectively. If this trend continues, it is a very good thing!
Total Inventory
According to TReND Mls Data, June 2009 inventory of single family homes is at 3909 units. It has risen pretty steadily since January 2009. Current inventory levels have decreased 2.0% from June 2008. However, closed sales have underperformed 2009 by 10%. This has resulted in a slowing of inventory velocity and an inventory backlog of more than 11 months. This is not a very good thing!
Median/Average Sales Price
Due to the abundance of inventory in Chester County, home prices have fallen substantially. The median price of homes sold and settled in June 2009 was $317,000, a 9.2% decrease from June 2008. Average home prices sold and settled in June 2009 was $358,000, a 13.3% decrease from June 2008. The numbers indicate that more modestly priced homes are selling at a higher rate than higher priced home. Average sales price has been on a steady decline since November 2007. Median price have been on the decline since August 2008. This is not a very good thing!
So, I think the most significant statistic to watch for the rest of 2009 will be Pending Home Sales. Pending Home Sales is the leading indicator for closed sales which are crucial to all ot the issues that stand in the way of a bullish real estate recovery. As homes sell, inventory decreases, prices recover, homeowners begin breathing again.
The Chester County real estate market typically begins to cool after June and begins to warm up again in January. If pending sales cool at a slower pace than usual, we can be pretty sure that a real estate recovery in Chester County has begun. Check back in here again in October, We'll have another look at this when 3rd quarter results are available.
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