Things are Not Always as they Appear
If one were to listen to the media, it would appear that no one is purchasing real estate. This is not exactly true. This year in Westport there have been 359 single family homes sold year to date( October 2, 2006). When compared to 2005, this is a decrease of approximately 10%. There are also, 71 homes under Contract. However,to have a more accurate idea of what is happening, it is more interesting to look back over the past 5 years. The following are the figures for homes sold from Jan.1-October 2 in their respective years:
Otherwise stated, in Westport we are ahead of the pace set in 2003. In terms of actual dollars and cents spent for real estate it may be premature to compare this year with other years until the end of the year. However, I would not be surprised if more total dollars were spent this year than in previous years, due in part to a larger number of high end sales in 2006. Even if the latter were not put into the equation, we are on a pace to sell more homes than in 2003, which was our third best year.
The totals in Weston are not quite so rosy. Sales in 2006 are about 30% behind those (year to date) of 2005. Year to date figures for Weston (thru October 2, 2006) are as follows:
Inventory numbers in both Westport and Weston are on a slight decline when compared to previous months. In terms of Single Family homes, there are currently 359 active Single Family homes in Westport, compared to 392 homes at the height of the market in May/June, but above the early spring (April) figures of 288. The same scenario is true in Weston. There are currently 152 active single family homes on the market in Weston, compared to 181 at the height of the spring market, and 143 in the early part of the market. All of these figures are well above levels that we have seen in the past five years.
The changing nature of the market is that the lower end of the market has been more active in the latter part of the year and there has been a fall off in prices. The true statistics for this decrease are difficult to decipher. Typical methods for comparison used are average sales prices, and median sales prices. In both of these cases in Westport we are ahead of last year, based again on a higher percentage of high end sales. In actuality, the 'correction' has probably been on the order of 10% in some cases. Homes really have to be looked at on a case by case basis. Factors that were previously overlooked in a heated market, are now having a direct effect on values. These include location, condition of kitchen and baths, useable land, exterior conditions.
In the high end, prices have been adjusted by large amounts (sometimes in the hundred of thousands of dollars), but this has been due in part to overpricing. For example, a $3,000,000 house that has been overpriced by 10% or more based on pricing ahead of the market (as in previous years), could see a price reduction of $300,000 or more. The equivalent for a million dollar home would be price reductions of $100,000.
Interest rates have recently fallen to levels that were very similar to figures seen a year ago, at approximately 6.30%. It would appear that the Fed is not unhappy with the Real estate price corrections in light of the Fed's concern with inflation. The Real estate slowdown has apparently been a major factor in the economy slowing somewhere between 1-2% in 2006.
All in all, it is a good time to be a buyer, especially in the lower end, where a buyer is likely to get considerably more house for the money than a year ago. Sellers will probably need to become more realistic.
The number of homes that go unsold is increasing due to larger of numbers of homes on the market. Initial pricing is more critical than ever in this marketplace.