Monday, April 23, 2012

Getting Better


There are many deep and profound thoughts about how and why the real estate market may recover, but, essentially, this is a simple business: we need to sell more houses, and we need to generate more dollar volume. From 2005-10, the only real estate statistic that grew each year in the Philadelphia area* was the number of expired properties. One good sign, finally, was that there were fewer expired properties in 2011 than there were in 2010. To continue to move forward, the most obvious signs of a recovery in the market in 2012 will be an increase in unit sales and/or dollar volume.

The end of 2011 and the beginning of 2012 portend that the slide down may be over and the market is stabilizing and seeking the elusive “new normal.” This is true for unit sales and dollar volume: in Q3-2011, Q4-2011 and Q1-2012, there were more unit sales and greater closed dollar volume than in the same quarters of the previous years. During the tax credit delirium (from Sept-2009 to June-2010), there were 10 consecutive months of increased unit sales – barring an unforeseen catastrophe, we will equal that streak in April-2012 and surpass it in May-2012.


This newsletter will compare Q1-2012 to Q1-2011 for the Philadelphia area*. The information was gathered from the “Market Statistics” section in the TREND MLS:

Closed (Residential) Units were up 7.5% compared to Q1-11: up 9% in PA, and up 4% in NJ

Closed Dollar Volume ($2.1+ billion) was up 8% compared to Q1-11: up 7% in PA, and up 13% in NJ

Pending Properties were up 28% compared to Q1-11: up 29% in PA, and up 26% in NJ (this bodes well for Q2-12)

Distressed Properties: 19% of closed sales in Q1-12 were distressed properties – 8% short sales and 11% REOs, this is a slight reduction from Q1-11

Days on Market for closed units increased 3.5% (to 112 DOM) compared to Q1-11 – up 3% in PA (107 DOM), and up 5% in NJ (127 DOM)

New Listings - there were approximately 26K+ new listings in Q1-12 in the area* – the lowest number of new listings in Q1 since 2004: the fewer new listings there are, the greater the odds that old inventory start to get cleared out.


Pending Properties point to an active spring: though their growth tempered somewhat in March, after the good weather in January and February, they remained strong (20% above MAR-2011 pendings).

Interest rates remain low.

Weekend weather remains good!


Average Price for closed properties in Q1-12 was down 4% from Q1-11 to $232K for the Philadelphia area*: down 3% in PA to $237K, and down 6% in NJ to $215K

Per above, average prices remain under pressure, even with extra buyers, because . . .

Inventory remains high!

The chart below identifies inventory levels by price ranges in the Philadelphia area in early April 2012:


The numbers below represent “annualized” inventory** (see explanation below). The suburban counties of Bucks, Montgomery and Chester are doing better than other counties in the area* as inventory levels struggle to stay below last year’s levels:

Berks County has 9.3 months of inventory, about ½ month below APR-11

Bucks County rose to 7.9 months, almost a full month below APR-11 – Bucks has less than 7 months of inventory in the under $300K price range (!)

Chester County rose slightly to 8.3 months, slightly below APR-11 level

Delaware County continues to be bothersome with 10 months of inventory – slightly below the APR-11 level

Montgomery County rose to 8 months of inventory – almost a full month below APR-11

Philadelphia County rose to 9.5 months, finally creating “separation” from last year at about ½ month below APR-11

Burlington (NJ) County remains above 1 year at 12.6 months, about ½ month below APR-11

Camden (NJ) County remains troublesome – still above APR-11 with 14.6 months of inventory

Gloucester (NJ) County continues to improve and is at 12.4 months of inventory – almost 2 months below APR-11 inventory

Mercer (NJ) County is slightly below APR-11 with 10.8 months – the crowded segment of this county remains the under $300K range (almost 11 months) while the $700K-$1 million range has slightly above 8 months of inventory, and $300-$700K has 9 months of inventory

**”Annualized” Inventory - to get a similar number for the area where you have listings: find out how many properties sold in the last 12 months and divide that by 12 (to get an average of how many properties sell per month), then unclick “Settled” and click “Active”; then, divide the number of “Active” properties by the average number of sales per month (the previous number) to get “annualized inventory.”

*Statistics described in the above information as “the Philadelphia area” are downloaded from the TREND Multiple Listing Service, and they are based on information from Berks, Bucks, Chester, Delaware, Montgomery and Philadelphia counties in PA; and Burlington, Camden, Gloucester and Mercer counties in NJ

Reprinted with permission of:

Charles V.Cosgrove, Jr.

Owner/Director, Mr. Chips School of Real Estate (RE-001036)

Bailiwick Office Condominiums, Unit 48-A

252 W. Swamp Rd.

Doylestown PA 18901

267-251-9133 (Personal)

888-467-1845 (Fax)

215-345-7250 (Mr. Chips Office)

PA Broker - RM420874

NJ Broker - 0447708

NC Broker - 144656


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