The real estate market showed quite an improvement last month in Anne Arundel County, Maryland, compared to September 2008. The number of homes sold and settled was UP almost 25% and the "Days on Market" went down over 11%.
I don't believe this is the beginning of a market trend for homeowners who are waiting for the market to turn before they sell, however. More likely, it is a temporary "bubble" that has been stimulated by the federal government's $8,000 tax credit (due to expire next month) and the huge inventory of bank-owned properties and short sales being picked up by investors at bargain prices and then flipped for profit (still at bargain sale prices) after some improvements. These properties continued to drive DOWN both the average (-13.95%) and median (-9.38%) sold prices in Anne Arundel County in September 2009.
There was quite a shift in the type of financing buyers used last month, compared to a year ago, with the number of Conventional loans remaining steady, but a lot more FHA and VA loans, and nearly three times as many cash purchases as a year ago. I suspect most of those cash purchases were probably made by speculators, not owner-occupant homebuyers.
Source: MRIS
Compare these numbers to buyers' financing choices in Anne Arundel County during the same month last year: FHA (140), VA (41), Conventional (153), Cash (13), Assumption (31), and Other (10). FHA has grown exponentially as the financing of choice - probably due to the disproportionate number of first-time home buyers pulled into the market-place by the temporary $8,000 tax credit.
If the tax credit legislation expires, as scheduled on November 30, it will be interesting to track financing for another year.
My crystal ball: I consider the greatest predictor of future real estate trends to be the comings and goings in the market... New listings coming on the market each month vs. listings going under contract. In September 2009, there were 810 new listings in Anne Arundel County, Maryland - more than double the 379 non-contingent home sales. Even if you add in the 170 contingent home sales for a total of 549, the inventory is still growing at a much greater rate than homes are selling.
This is one of the prime measures of a "Buyer's Market" - i.e., when market conditions favor home buyers, rather than home sellers. With 4038 homes on the market throughout the county in a single month, 482 going to settlement, and 549 combined contingent and non-contingent new contracts - buyers clearly have the upper hand. In a nutshell, they have options... many options. If one seller won't meet their terms, chances are the next one will.
So yes... things are better, in that the number of homes sold and settled went up nearly 25% last month over the same month last year, and the "Days on Market" went down. BUT let's not start celebrating quite yet.
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DISCLAIMER: Information contained in this post is deemed reliable on the date of publication, but it is not guaranteed and it is subject to change without notice.
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Margaret Woda, REALTOR and Associate Broker
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Good info and analysis Margaret. I'm sure that a home buyer with questions will be glad that you're their agent. Understanding market trends is an important part of our job, if we understand them and you clearly do.
I agree with your analysis 100%.. As a matter of fact when you read some of the article about the tax credit, it is only an assumption as to the effect of the tax credit.. I am cautiously optimistic, but it IS too soon to celebrate. Even in the last report by NAR, there were increased pendings, but many don't end up closing... so the report was a bit overly optimistic in my opinion.
Margaret,
I agree. Let's leave the champagne corked. While there are more sales, the prices continue down and the number of homes coming on the market is up. My market place is southern Dupage and Will counties which are in the Chicago suburbs.
Margaret - I think you are spot on when it comes to the market and the same trends are showing up in our area. The market is not 'on the mend' yet but rather being artificially propped up by the tax credit. It will be interesting to see how the expiration of the tax credit affects the market if the government does not extend it. (I think they will simply because they too are scared to watch the bottom drop out if they don't.)
Margaret - we are seeing similar things here on financing especially on the homes under $400,000. Higher end homes are mostly still conventional and #2 is cash. Great report. ~Rita
Margaret
Thanks for your alwasy right-on-target review. We are seeing fewer days on the market and an increase in price in some neighborhoods. Good but I'm still cautious.
Michael
Fantastic! Way to continue to be the local expert.
It is so interesting to read of other markets.. You write in terms of thousands of homes on the market in one county, the second quarter of 2009 shows only 80 homes sold for the whole Texoma Board of Realtors with 160 average days on the market. That's for more an one county...
well this year is just about over and a new year is just around the corner it will be interesting to see how things pan out
I think your crystal ball is in focus. inventory is still growing.
Stunned to see my little ol' market study with a gold star and so many comments. Not surprised that you all seem to agree that current and recent statistics are really skewed by the $8,000 tax credit and all the distress sales. I think it's going to take many more months of tracking to see what's really happening out there. In the meantime, I guess we should just enjoy the fact that there are more sales happening and homes are on the market for fewer days.
Thanks Margaret ... a glimmer of light is always appreciated! pippa
Thanks for the post today, Lately in seacoast NH we've seen more under agreements along with more inventory.
Patricia
I agree the big test will be the activity level after the First time home buyer tax credit has expired.
Hi Margaret, Congratulations on the feature. It is as you say, great that things ( Sales) are improving but your caveat at the end says it all. "Let's not celebrate just yet". I very much agree.