Weston Real Estate Market Update November 2009

November Thanks…sees light
Weston’s active inventory in November dropped 38% to 124 vs. 172 in November, 2008.  This inventory almost mirrors November, 2007 which had an inventory of 127 properties.   The properties with accepted offers increased 25% over the same period last year and the properties with contracts increased 37%, all encouraging news. Much of the decrease in inventory is due to the usual dropping of listings during the holiday season, although we anticipate active listings to increase after the first of the year.

While the National Association of Realtors announced sales of resale homes jumped more than 10% nationally in October, 2009 over a year earlier – those numbers are not the numbers to watch when trying to find the bottom of your local market.   In other words, don’t make a local decision based on national information.  The resale numbers have been up in markets all across the country for more than a year now, we just never heard about it from the evening news, etc.  Most buyers, and the media in general, look to pricing trends to indicate the bottom of the market has been hit. But, before making that dictum, a buyer must first define what the bottom really is and in particular, for a certain area.  Of course, the bottom of a market can only be declared when prices begin to go back up. When the word on the street is that “prices are the lowest they’ve been in years”, that is probably a precursor of a bottom forming.  This is what we are hearing now. If you’re one of those waiting for the “bottom” before you start looking for a home, you might want to begin now.   Keep in mind, however, that everyone else is also looking for the bottom and when the market turns, and it will, it will move upward quickly as demand starts to outpace supply and higher priced homes begin selling again. So, here are indicators to watch to find the bottom:

1. Inventory: Watch for inventory to start dropping. When this happens, you’ve entered the bottom territory. Buyers start jumping on the bandwagon once there is inventory where prices have hit an acceptable level, with the result being a decrease in inventory.

2. Pricing: Now, this is what everyone watches. If you’re going to track pricing as a bottom indicator, then start watching it from month to month, instead of year over year. Thus, when prices start moving up, say, from March to April to May to June – THEN you have most likely hit the bottom on pricing. A market can experience price increases month after month while still showing lower prices than a year before – thus the buyer, while waiting for signs that prices are moving up over last year, may have missed the bottom on pricing. By the time value starts surpassing year over year, the market will have already improved greatly.

3. Multiple offers: As buyers start competing for the best properties that have the lowest prices, then you’ve found another sign of the bottom of the market.

4. Days on market: Once prices have hit bottom and buyers start gobbling up houses and start competing with each other – then you’ll see the days on market begin dropping.

For some markets across the country, all of these indicators have already started showing signs of the bottom, such as Florida, Washington DC, Phoenix, Las Vegas, Las Angeles and other metropolitan areas that were hit heavy by foreclosures.

Thanks to attractive mortgage rates and high affordability, we have seen some positives for the Weston housing market, which has been showing signs of stabilization for several months now. Sales have surged recently as buyers scramble to take advantage of the government’s first-time home buyer tax credit.

A “possible” obstacle to a continued housing market recovery is the number of mortgages that are “underwater,” where borrowers owe more than the residence is worth. This negative equity disqualifies many homeowners from refinancing and prevents some from selling their homes and purchasing another. Borrowers with negative equity are also more prone to default and foreclosure. Mark Zandi, chief economist at Moody’s Economy.com, indicates that about 25 percent of single-family homes with mortgages have negative equity.  Until values begin to increase, these under water homes will not become part of the sales market.   When vales do increase and these homes hit the market, it could have a flattening effect on pricing until they move through the market.

Recent unemployment numbers have been relative positive, another important indicator for the market, not so much as a potential source of purchasers, but for the mental outlook and confidence needed to commit to the purchase of a new home.

Weston Real Estate Sales Activity - November 2009

Properties Sold	11/30/07-11/30/08	11/30/08-11/30/09	Change	Price Range	Active	Offers	Pending
Total Homes	116	90	-22.4%	$0-999k	52	5	5
Avg. Sale Price	$1,183,663	$944,377	-20.2%	$1m-1,499m	28	3	3
Median Price	$922,500	$825,000	-10.6%	$1.5m-$1,999m	23	0	0
Highest Price	$5,200,000	$2,900,000	-44.2%	$2-$2,499m	5	0	0
Lowest Price	$290,000	$172,500	-40.5%	$2.5-$2,999m	8	0	0
				$3m+	8	0	0