Weston Real Estate Market Update September 2009

In Weston, there’s good, bad, and ugly news in the residential real estate market.  The good news: There is an uptick in the market activity…buyer traffic in today’s market is more characteristic of late spring activity than early fall market. Buyers are viewing the current market as an opportunity to capitalize on significant values, with Weston prices below levels of seven years ago: median prices were up 2.9% from August 2009, but 16.6% lower when compared with September of 2008. (The median price is the market price for a given period of time where half the homes sold for higher and half sold for less.)  More good news: compared to September 2008, there were 50% more properties with accepted offers, and about the same number of properties under contract. These data substantiate the perception that there are motivated buyers in the market…especially for this time of year. And there is a lot to look at: inventory of active single family homes is up 10% from this time last year. Based on the overall absorption rate, Weston has a two-year supply of inventory… and that inventory is growing.

The bad news is that the upper end of the market, (the move-up buyer, second-home buyer and luxury segment), is problematic. Transactions on properties averaging up to $1.499,999 did not change from this same time last year.  However, the sold volume is down 70.5% on properties over $1.5m. At some price levels above $1.5 million, there has been a 90% decrease in transactions.

Here are the transaction stats: Up to $999,999, the sold volume is about the same as last year, but down 25% from 9/30/06-07.  From $1m-$1,499,999, the sold properties are also about the same from this time last year but down 53.8% from 9/30/06-07.  From here, as prices escalate, the news gets worse:  $1.5m-$1,999,999, sold properties are down 71.4% from 9.30/07-9/30/08; from $2m-$2.5m, sold properties are down 80% from  9/30/06-9/30/09, and $2.5m+ is down 90% from 9/30/08-9/30/09.

THE APPRAISAL TUG OF WAR

There is another issue with the potential to significantly affect transactions at all levels of the market. Appraisals are coming in lower than contracted home sale amounts. This circumstance, which is becoming more common, introduces several varieties of pressure into the sales process, after an offer has been accepted and a contract has been signed.  First, banks won’t finance amounts greater than the appraisal. Sellers and buyers are then confronted with difficult choices.  Most often, buyers lower their offer to match the bank appraisal. (Rarely will they agree to put more cash into the transaction to compensate for the bank financing shortfall). The seller is essentially cornered. He/she can lower an already compromised price, walk away from the transaction, or seek another, potentially more favorable appraisal. Either way, the transaction is delayed, and potentially killed by after-contract price negotiations. This dilemma is becoming more common as appraisers become more cautious and conservative.

Meanwhile, more short sales and foreclosures are expected to emerge in Weston. This will undoubtedly provide some interesting opportunities, and may even skew overall sales statistics in the coming months. The looming reset of adjustable mortgages will almost certainly impact this segment of the market.

There’s no reliable way of predicting the arrival of a true market turnaround. What we can say is that there are buying opportunities, and brisk activity, especially at prices below $1.5 million. We also know that the appraisal issues will continue to have a disruptive impact on transactions. My view: we’re not finished with twists and turns in the Weston market…maybe even more downward pricing pressure. Regardless of market gyrations, it is clear that it will be several years before the market returns to pre 2006 levels.

Weston Real Estate Sales Activity - September 2009

Properties Sold	9/30/07-9/30/08	9/30/08-9/30/09	Change	Price Range	Active	Offers	Pending
Total Homes	113	85	-24.66%	$0-999k	71	7	7
Avg. Sale Price	$1,244,381	$940,000	-24.3%	$1m-1,499m	34	2	0
Median Price	$960,000	$800,000	-16.6%	$1.5m-$1,999m	33	1	2
Highest Price	$5,200,000	$2,900,000	-54.2%	$2-$2,499m	6	0	0
Lowest Price	$290,000	$172,500	-40.6%	$2.5-$2,999m	10	0	0
				$3m+	8	0	0