Sussex County, Delaware Home Sales - as of February 10, 2009

Spring is in the air! The snow is melted, the windows are opened, and the jackets are left at home. At least for a couple more days until we get the threat of "the white stuff" again...

But, with warmer weather comes more real estate activity. Historically, Spring has always been the busiest time of year for real estate, and that usually starts at the very end of February. We have had a respectful amount of homes sell in the past 41 days, and I have a good feeling we will only see these numbers rise. Below is a break down of all the closed real estate transactions in 2009 thus far.

Single Family - 73

Condo / Town Home - 22

Mobile - 8

Multi-Family - 1

Lots / Land - 27

Commercial - 4

For a total of 135 closed real estate transactions. I do not have the averages for January yet, but will post those as soon as they become available.

Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.

Existing Home Sales in Surprise Jump

Sales of existing homes in December rose 6.5% from November. But prices continued to fall, down over 15% from last year.

NEW YORK (CNNMoney.com) -- The number of existing homes sold in December rose 6.5% from the previous month, according to a report released Monday, as bargain hunters took advantage of plummeting prices.

The National Association of Realtors said that home sales increased to a seasonally-adjusted, annualized rate of 4.74 million units. That's up from a revised pace of 4.45 million units sold in November and more than the rate of 4.4 million units projected by a consensus of industry analysts as reported by Briefing.com.

"We have some months to go before we are out of the woods on the housing front," said Robert Dye, senior economist at PNC financial services group. Especially considering "weak consumer confidence and ongoing rapid deterioration in labor markets."

Still, December's existing home sales are down 3.5% compared with December of 2007, when the seasonally-adjusted, annual sales rate was 4.91 million. Existing homes include single family homes, townhomes, condominiums and co-ops.

For all of 2008, there were 4,912,000 homes sold, which was the lowest volume since 1997, when there were 4,371,000 homes sold. Sales volume in 2008 was down 13.1% from the 5,652,000 existing homes sold in 2007.

Bargain hunters: Bargain prices are bringing buyers back into the market. The median existing home price was down 15.3% to $175,400 from December 2007, when the median price was $207,000. The median price measures where half of the homes sold for more and half sold for less.

"Americans love a bargain, and the housing market is no exception," said Mike Larson, real estate and interest rate analyst for Weiss Research in a written statement.

Thanks to the sales increase, the number of homes available on the market decreased 11.7% in December from the previous month, to 3.68 million. That represents a 9.3-month inventory supply at the current pace of sales, down from a 11.2-month supply in November.

"That's exactly what we need to see if the housing market is ever going to get back to a state of equilibrium," said Larson.

Home prices were pushed lower by the high volume of distressed sales, which accounted for 45% of December transactions according to the report.

"The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal, balanced conditions," said NAR chief economist Lawrence Yun in a written statement. He warned that the housing market is far from healthy. "Buyers will continue to have an edge over sellers for the foreseeable future."

Surge in the West: The number of homes sold nationwide was buoyed by a surge in the West, where the housing market has been hardest hit by a record number of foreclosures.

Existing home sales in the West surged 13.6% to an annual rate of 1.25 million in December, up 31.6% from a year ago. But the median price in the West was $213,100, down 31.5% from December 2007.

In the South, existing home sales increased 7.4% to an annual pace of 1.74 million in December, but that was still 11.2% lower than December a year ago. And sales in the Midwest increased 4% in December to an annual rate of 1.04 million, but were down 10.3% from the same period last year.

The Northeast saw sales edge 1.4% lower, to an annual pace of 720,000 in December, down 14.3% from December 2007.

In the months to come: Analysts said that the weakening job market would slow any recovery in housing.

On Monday morning, a slew of companies announced a massive wave of job cuts. Home Depot (HD, Fortune 500), the No. 1 home improvement retailer, announced it would eliminate 7,000 jobs, or 2% of its total workforce, while Caterpillar (CAT, Fortune 500) said it will cut 20,000 jobs.

"Unfortunately, we are seeing fast and furious [layoffs] now," said PNC's Robert Dye. "And that does add to the level of uncertainty and it does put workers and consumers on edge."

Mike Larson from Weiss Research echoed that sentiment. "It's hard to imagine a lasting turn in the housing market with thousands of layoffs being announced every few days," he said.

The Obama administration is now at work on an economic recovery plan, and Yun said that this will be critical to the revitalization of the housing industry.

"The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery," Yun said in a statement.

By Catherine Clifford, CNNMoney.com staff writer

Last Updated: January 26, 2009: 12:30 PM ET

The graph below reinforces my belief that a housing stimulus could turn the housing market on a dime. Thus, supporting the argument that to “Buy at the Bottom” you need to buy prior to the announcement of Obama’s Stimulus Package on or shortly after January 20th.

Anyway, the last time the gov’t intervened in the housing market by providing a tax credit and reduced mortgage rates (as the NAHB is requesting now) was in 1975. Housing starts immediately reacted to the stimulus and turned up within 2 months. Now, keep in mind that Housing Starts typically occur (on average) about two months after the home sale (contract signed). So, what this chart shows is that Home Sales literally turned on a dime the moment the Stimulus went into effect. This should be expected . . . it’s very similar to a Black Friday sale at a retail store. The first people to get in the doors and buy benefit from having the most products available. This is why people line up outside the doors of store for hours before the doors open . . . they want to have the best selection and make sure they get to buy products before they’re sold out. This phenomenon actually caused people to get trampled this year and push the doors down at Walmart . . . which is crazy and disturbing but it shows you how badly people want to be the first to capitalize on a major sale. Well, it’s the same with housing. For those who have been waiting to buy a home and can still afford to do so, they will benefit by being the first people “through the doors” and thus get the greatest selection of homes and maybe even capitalize on Builder incentives that the Builders haven’t yet removed. And make no mistake, Builders will be very quick to discontinue their incentives once they see a pickup in housing demand. I know because I am one of these builders who intends to remove or at least reduce my incentives shortly after the announcement of Obama’s stimulus package.

So, here’s the thing that smart buyers already know . . . they can get special entrance through the side door of the housing store right now, capitalize on the sale prices, have the best selection, and have a private showing of all the store merchandise. What I’m saying is that for those who have been waiting to buy a home, the best time to capitalize on Obama’s housing incentives is right now, prior to them being announced (assuming you setup settlement for late January/early February). The only reason not to do this is if you believe that Obama will not incorporate some sort of housing stimulus into his Economic Recovery Package. In my opinion based upon everything I’ve read and based upon the sound logic that fixing housing is the most important factor in fixing the economy, I think it is highly unlikely that Obama won’t enact a housing stimulus shortly after inauguration. If your buyers are worried that by buying now, they might not be eligible for any housing stimulus incentives announced on January 20th, here’s what I recommend they do: Include a contingency in the sales contract that says the buyers intend to capitalize on the housing incentives in the anticipated Economic Recovery Package and have the option to cancel this contract if: 1. A package is not passed prior to settlement or 2. If contracting prior to settlement somehow makes them ineligible for the incentives. To protect the seller, I would include a clause that says: In the event that the Buyer is not eligible for the housing incentives due to the contract being executed prior to the incentives being enacted, a new contract will be written between the Buyer and the Seller with the same price and terms of the existing contract and executed immediately after the housing incentives are enacted. Once the new contract is executed, the existing contract will be declared null and void. Anyway, you get the picture . . . the point is that there are ways to incorporate language into the contract that allows the Buyer to “Have their Cake and Eat it Too” by protecting the buyer in the event that they are not able to eligible for the housing stimulus incentives as a result of contracting prior to the incentives being implemented.

Remember, the main reason to buy now is so Buyer’s can negotiate a good deal for themselves at the point when Sellers are the most desperate. As I explained in my prior email, after the housing stimulus is announced, Seller’s won’t be willing to offer the types of deals they are now. The pressure will be off and the balance of power between Buyer and Seller will be somewhat restored.

End of Year 2008 Housing Update

Housing Starts

Housing starts for November fell 18.9% from a year ago to an annual rate of 625,000 homes. This is very significant. First, let me explain how low this number really is. This is the lowest housing starts numbers since the government started tracking this statistic in 1959. The lowest housing start number in the ‘91 housing recession was 798,000. The lowest housing starts number in the 1981 housing recession was 837,000 homes. The average housing starts over the last 30 years has been 1,514,000 homes. So, we are almost 1/3 of the average right now. The current # is even more significant when you consider how many more people we have living in the US than we did 30 years ago. The US Population is 37% higher now than it was 30 years ago. Keep in mind, housing starts represent about 75% new homes and about 25% replacement of old homes (tear downs) and I would argue that as housing starts decline, the % represented by home replacement goes up. So, of the 625,000 housing starts, only about 469,000 represents new homes. These numbers are awful but here’s the good news . . . a low number is good for everyone except for builders. Why? Because, this means that builders are finally making very significant reductions in new home construction, allowing inventory (of existing and new homes) to be sold off. Housing starts are an indication of Builder Sentiment. So, the lower housing starts are, the more desperate builders are . . . the more desperate builders are, the better deals they are willing to give. This is important for any of your prospects looking to buy a new home and I’ll write more on this later. So, that brings us to inventories.

Home Inventory

First, it is important to recognize that new home inventory has been falling steadily from a peak of 572,000 in July, 2006 to 374,000 in November, 2008 (in other words, it has been declining for 2 ½ years!). The media tends to skew public opinion about inventory by focusing only on “Months of Inventory”. Months of Inventory is basically how many months it will take to sell the existing new home inventory at the current new home sales pace. Of course, when the sales pace is at historically low levels, even modest new home inventory will represent a high Months of Inventory number. The average new home inventory over the last 30 years is 350,000 homes so we are only slightly over the average right now at 374,000 homes . . . so obviously, the new home inventory situation isn’t nearly as bad as the media would like you to believe. Even more important is how quickly the Months of Inventory number could drop when the housing market bottoms and sales starts going up. If we get a 25% increase in homes sales along with a 25% decrease in inventory, the Months of Inventory # would drop by 40%. It’s at 11.5 months now so it would drop to 6.9 months. The point is, in most of the past housing rebounds, home sales have increased rapidly off their bottoms and home inventories have dropped rapidly so it is highly likely that during this coming winter/spring, when I expect home sales to pick up, the Months of Inventory # will improve dramatically.

Sales

There’s not much to say about Sales other than they are low and got even lower in November. I expect December to be similar to November if not slightly higher than November. What really hurt sales in November and December was the Policy Makers leaking the information that they may buy mortgage rates down to 4.5%. All this did is put would-be buyers more firmly on the fence as they wait for 4.5% mortgage rates. I expressed my frustration with this at my Philadelphia Fed Meeting on December 9^th to Charles Plosser, the President of the Philly Fed and a member of the FOMC Committee. I don’t think the Fed realized how damaging this information leak was to sales. Regardless, I believe the low interest rates have created some renewed interest in home buying in the latter half of December so my suspicion is that December home sales (seasonally adjusted) will be a little better than November’s. I do expect that we’ll see a significant improvement in Sales this Winter and Spring, regardless of what the economy does. People are going to realize that the waiting game is over and now is the time to buy that home they’ve been putting off for a few years. Also, more importantly, new home buyers will start coming into the market and stop living with their parents and this will help sales across the board because new homes buyers will buy a home from someone who will finally be able to go out and buy the home they want but couldn’t until they sold their existing home. This will play an especially large role in terms of enabling retirees to buy their retirement home (in Sussex County we hope J).

Why Buying a Home in the Next Three Weeks May Prove to be an Extremely Smart Decision

This is the real reason I wanted to blog this information. In my opinion, buying a home between now and January 20^th (Inauguration) will prove to be the best time to buy a home in our lifetime. Here’s why:

So, there’s no doubt that there is pent-up demand out there and that many people have been patiently “waiting for the bottom” for a couple years now. The media reacts to reported housing numbers (sales & price). Sales always pickup before price and in most prior downturns, sales picks up very quickly. And, one month’s sales are reported about 3 ½ weeks after the end of the month so there is a delay between the actual activity and when the data for that activity is reported. Only when the numbers are published will the media report this data and make predictions based upon it. The point is, if you wait for the media to start reporting about a bottom in home sales, you will already be two or three months late and will miss the bottom. However, even more important, if the sales pace returns with a vengeance like it has in most of the past downturns, builders and existing home sellers will not be willing to offer the great discounts and deals they are now. Once it is common knowledge that the market has bottomed, home sellers will feel as if the pressure is off and will be less desperate and thus less willing to agree to huge discounts or incentives . In other words, the best deals are going to be given to the customers that buy prior to the bottom when sales are very slow because once we have the bottom, sales will pickup and sellers will significantly reduce their willingness to offer incredible deals. Also, sales are always slower during the winter so sellers are even more incentivized right now to offer incredible deals.

Here’s another reason to buy a home very soon. The window of opportunity right now to get a great deal is really only about 3 weeks long . . . here’s why: Obama’s inauguration is on January 20^th. Do you think Obama is going to implement an Economic Stimulus Package very shortly after entering the White House? His economic team has already spent numerous hours working on this package so that it is ready immediately upon his inauguration. This is no secret . . . Obama has been very vocal about this. Do you think Obama’s Stimulus Package is going to have a strong Housing Stimulus component to it? You bet . . . it is becoming more and more accepted by economists that to fix the economy, you have to fix housing. So, in other words, on or shortly after January 20^th, we will have a package in place to seriously kick start housing. Now, ask yourself this . . . once the package is announced and home sellers (Builders & Existing Home Sellers) know that Obama has taken steps to significantly increase demand in housing, what do you think will happen to their willingness to offer incredible deals? I can tell you . . . it will significantly decline. Why would they offer a great deal when they know that they no longer need to since the housing stimulus is going to be all the incentive buyers need? The basic point is this . . . the window of opportunity for would-be home buyers to be offered a special extra incentive or significant discount is only open for 3 more weeks. When Obama takes office, he is going to move quickly and aggressively to fix housing. Once he does this . . . even before we see the results, just knowing what he is going to do will take the pressure off housing and make the market a little less favorable to buyers. Here’s the other good news . . . for buyers who contract before January 20^th but settle after January 20^th, they will very likely be able to benefit from whatever stimulus Obama implements (low rates, tax rebates, etc). So, buying over the next three weeks is a “Two-fer” . . . you get the great discounts associated with the challenging housing market and you’ll most likely also be able to capitalize on whatever incentives are included in Obama’s package.

In fact, you can take this argument even further for new home buyers . . . Obama’s stimulus package is likely to be temporary because only a temporary housing stimulus will create the desired urgency and housing demand. So, Obama may do something like lowering conforming interest rates to 4.5% for 6 months only. If he does this, any new Home Buyer who waits until the package is announced may not benefit from this if their house cannot be built fast enough to settle within 6 months. New Home Buyers who buy now increase their chances of capitalizing on any temporary housing incentives in Obama’s stimulus package.

Anyway, hopefully this all makes sense. I really believe that the peak of home sellers willingness to offer huge discounts or incentives is right now. Waiting until Obama’s Inauguration to see what he’s going to do seems like a logical approach for would-be home buyers but I think it will prove to be a mistake since the certainty of knowing the specifics of his housing stimulus will make home sellers feel more secure and less willing to offer great deals.

Average House Prices Don't Tell the Real Story

Samuel Clemens, better known as Mark Twain, wrote that "figures don't lie, but liars figure." He also credited Benjamin Disraeli with the quote: "There are three kinds of lies: lies, damned lies and statistics."

Canada's housing market statistics have been making headlines this year, as the number of sales and average house prices have declined for the first time in many years. The drop in average home prices, in particular, are making dramatic headlines, worrying Canadians that a full-scale housing crash is underway. But on the front lines, real estate leaders say the market isn't as bad as the media makes it sound.

Part of the problem may be those lying statistics.

Average house prices reported in Canada are based on sales through the Multiple Listings Service, which is operated locally by real estate boards across the country. National numbers are compiled and reported each month by the Canadian Real Estate Association (CREA).

The system is flawed because it doesn't include private and most new home sales, but it's the most accurate reflection of house prices that's available. The numbers are used by most economists and by Canada Mortgage and Housing Corp. as a major economic indicator.

Recently two banks announced they were introducing new indexes to present a more accurate picture of house prices. First off the mark was TD Bank Financial Group, which unveiled the TD Home Price Index (TD HPI) in November.

TD says that the problem with using average MLS prices is seen when markets are fluctuating significantly. "Such is the case in Canada at the moment," say TD economists Pascal Gauthier and Grant Bishop in a special report . "As at Oct. 08, sales were down 50 per cent British Columbia, for example. Since average prices in British Columbia are the highest in the nation, the drop in sales tends to overstate the extent of price declines when applied to a simple national average."

The new TD HPI weights the markets by the outstanding stock of homes within each market. "This will help control for price volatility related solely to shifts in sales volumes – which arguably distort national figures," says Gauthier.

"We weigh each major market by its share of housing stock (as per cent of total) using the number of dwellings from Census data, interpolated as needed between Census years. To remain agnostic about post-2006 Census developments, weights are fixed after the 2006 Census until we get the next Census from 2011."

Using this example, the CREA sales-weighted average price for major markets in October was down 10.9 per cent from last year, while the TD HPI stock-weighted measure shows a decline of just 4.6 per cent.

National Bank Financial Group and Teranet have also launched a house price index, which they call "the first independent representation of the rate of change of Canadian single-family home prices based on 'repeat sale methodology'."

Monthly indices for six metropolitan areas – Calgary, Halifax, Ottawa, Montreal, Toronto and Vancouver – will be combined to form a Canadian Composite Index. The measurements are based on the records of public land registries. In Ontario, Teranet operates the province's Electronic Land Registration System.

Similar to the house price benchmark in the United States, the Teranet - National Bank index compares the values of properties that have been sold at least twice. The two prices are used to measure the increase or decrease in property value between the two periods of measurement. The index is published on the last Wednesday of each month at housepriceindex.ca .

"As an independent benchmark, the index will be used to sell financial products connected to the housing market while giving investors access to the residential real estate market as an asset class," says the National Bank and Teranet in a news release.

As a further example of how numbers can present a distorted picture of what's going on the market, Toronto Realtor John Pasalis has been explaining on his blog (www.realosophy.com) how the city's price declines have been exaggerated recently.

In October 2007, the City of Toronto approved a new land transfer tax that took effect in early 2008. The move created a rush to close home sales before the new tax kicked in, and affected mid- to upper-priced homes the most, because first-time buyers are exempt from the tax.

Pasalis says that although real estate sales usually decline in the fourth quarter of the year, in 2007 sales surged. Prices rose by an average of 17 per cent during the last quarter of the year, and were 28 per cent higher in December 2007 than in December 2006. "Did every house in Toronto appreciate by 28 per cent in December 2007 or were more people buying expensive homes in order to avoid the land transfer tax?" says Pasalis.

He says a disproportionate number of homes priced at more than $1 million (131 versus 47 the year before) skewed the average prices up in 2007.

"Even if actual house values remain unchanged during the last quarter of 2008, we will still see a significant decline in average prices because we anticipate fewer sales of $1 million this quarter. Thus, any decline in average prices during the final quarter of 2008 will be exaggerated by the inflated prices of 2007. This will make Toronto's real estate market appear to be depreciating at a much faster rate than it really is."

Pascalis recently interviewed Bishop, the TD economist, about the bank's new price index. The interview explains more about the reasoning behind the new index, and its methodology. For information about the Teranet – National Bank index, a 17-page section on the website explains how the number crunching works.

by Jim Adair - Mon, Dec 8, 2008
http://realestate.yahoo.com/info/news/average-house-prices-dont-tell-the-real-story;_ylt=Ait67SeiNZQm9XbdK5ASDM6kF7kF

Sussex County Homes Sales - as of November 10

The market is slowly moving, and homes are selling. See below for the closed real estate transactions for 2008, as of November 10.

Single Family - 1,400 (compared to 1,362 on 11/3)
Condo / Town Home - 556 (compared to 540 on 11/3)
Mobile - 250 (compared to 241 on 11/3)
Multi - 4 (compared to 4 on 11/3)
Lots / Land - 294 (compared to 289 on 11/2)
Farms - 7 (compared to 7 on 11/3)
Commercial - 55 (compared to 54 on 11/3)

For a total of 2,566 closed real estate transactions for 2008 thus far. Average list price, as of October 31, is $374,225, with an average sales price of $348,199. Homes have been selling at 93% of list price, and are averaging 190 days on the market.

Real Estate Market Outlook for 2009

Sussex County Housing Market Remains Positive

According to the Sussex County Association of Realtors, the housing statistics for 2008 thus far are rather positive considering the state of the nation’s economy, rising gas prices, energy costs and interest rates. There have been over 2,400 homes, including townhomes, condos and mobiles, and just under 300 lots sold since January of this year. The county has also seen an increase in commercial sales, which supports the notion that this county is growing and remains a good place to invest in real estate. We have seen a rapid rise in population, and big commercial companies, as well as small local ones, see the potential and economic benefit of investing in this area. This trend only solidifies our local market and will help carry it through the housing crisis. If you have not seen them yet, keep an eye out for local billboards advertising how many homes have sold in the area this year. The numbers may surprise, while comfort you during what seems to be a downhill spiral in the housing industry.

Also keep this in mind the next time you read an article in the paper regarding the current real estate market: Most media outlets are covering the real estate market on a nationwide level. What is happening in Arizona or California is not necessarily the same in Delaware or Maryland. You really must pick apart the article and take into consideration that in more cases than not, it is based on the national market. Best thing to do would be to visit your local Association of Realtors web site and follow the statistics posted there. After all, they are relevant to your community, therefore your local market.

To visit Sussex County, Delaware's location realto association board, please visit www.scoar.com.