Evansville Real Estate Market Maintains Current Sales Pace
September 8, 2009
In August the local real estate market maintained July 2009’s home sales pace. Buyer activity, especially among first time home buyers deciding to take advantage of the $8,000 tax credit and low interest rates, continues to be very active. August 2009 closed sales of 307 homes were down 3% from August 2008 sales and equivalent to July 2009 sales. In August 2009 the number of homes on the market was 2180 homes – which is comparable to previous months in 2009. September 2009 home sales are expected to be up from August 2009 home sales based on the number of homes that are reported to have accepted contracts. The average unit selling price for August 2009 of $117,484 was down 4% from 2008’s average of $122,786 and down 10% from August 2008’s average price of $130,417. While the average unit sale price is an indicator of home values, there are other factors which must be considered such as the mix of sales between higher priced homes and lower priced homes. Another item of note is that the list to sale price remained in the 94% to 96% range in August 2009 which indicates some discounting of list price in August. The factor that has the greatest impact on the market is the number of homes that are for sale. In August 2009 there were 2180 homes on the market. August 2008 had 2605 homes in inventory and the average for 2008 was 2491 homes. In August 2009 the absorption rate was at 7.1 months compared to previous highs in January 2009 of 15.1 months and in November 2008 of 12.4 months. There are several important factors that buyers and sellers need to be aware of when considering future real estate transactions. Consumer confidence continues to be low but is improving. The government continues to take aggressive steps to stabilize the economy, unemployment rates are starting to level off, the stock market continues to recover, mortgage interest rates continue to be low, and home inventories are down-especially well cared for, updated, move-in ready homes. With the pent up buyer demand and first time home buyer tax credit incentive of $8,000, we are experiencing a market turn around.
The real estate market is truly a product of supply and demand. The changes in supply and demand create what is referred to as a Buyer’s or a Seller’s market. The absorption rate is often used as a measure of what is currently being experienced in the real estate market. Absorption rates below 6 are generally considered a Seller’s market and above 6.5 a Buyer’s market. The absorption rate calculates how long it would take the market to absorb or sell all the homes currently for sale at the current sales rate. Prior to 2008 the absorption rate for the four county area was 6 or below. The average for 2007 was 7.8 months and the average for 2008 was 9.2 months. REMEMBER ALL REAL ESTATE IS LOCAL IN NATURE.
Let us now go a step deeper and look at what is going on in each of the four counties as each county has its own story to tell.
Evansville and Vanderburgh County
In Vanderburgh County 192 homes were sold in August 2009 which is down 4% from August 2008 sales of 201 homes and up 3% from July 2009 sales of 187 homes. The average sales price for August 2009 was $103,593 which was down 6% from 2008’s average of $110,091. Sell price to list price ratio was 96%. Again the big factor is the number of homes on the market. August 2009 had 1427 homes for sale compared to 1637 for August 2008 and 1447 for July 2009. August 2009’s absorption rate was at 7.4 months compared to 14.7 months in January 2009 and 11.4 months in November 2008.
Newburgh and Warrick County
August 2009 home sales of 67 homes were down 14% from August 2008 home sales of 78 homes and down 9% from July 2009 home sales of 74 homes. The average sales price for August 2009 was $171,923 compared to 2008’s average of $172,481. The sell to list ratio was 95%. August 2009 home inventory is at 410 homes compared to August 2008’s inventory of 557 homes and July 2009’s inventory of 443 homes. The August 2009 absorption rate was 6.1 months compared to January 2009’s absorption rate of 14.6 months and November 2008’s absorption rate of 12.8 months.
Princeton and Gibson County
Gibson County home sales for August 2009 of 29 homes were up 32% from August 2008 sales of 22 homes and equal to July 2009 sales of 29 homes. The average unit sales price for August 2009 was $98,376 compared to 2008’s average of $95,500. The list to sell ratio was 96%. August 2009 home inventory is at 184 homes which is down from August 2008’s home inventory of 250 homes and equivalent to July 2009 home inventory of 182 homes. August 2009’s absorption rate was 6.3 months compared to January 2009’s absorption rate of 18.3 months and November 2008’s absorption rate of 15.9 months.
Mount Vernon and Posey County
Posey County home sales for August 2009 of 19 homes were up 27% from August 2008 homes sales of 15 homes and equal to July 2009 home sales of 19 homes. The August 2009 average unit sales price was $95,050 compared to 2008’s average of $112,715. Posey County’s home inventory for August 2009 of 159 homes is equivalent to August 2008 home inventory and July 2009’s home inventory. The absorption rate in Posey County for August 2009 is at 8.4 months compared to February 2009’s absorption rate of 23.3 months and November 2008’s absorption rate of 24.5 months.
What does all of this mean to buyers and sellers? Buyers remain in an excellent position to purchase. However, Buyers need to be aware of what homes are in inventory, especially well maintained, and competitively priced homes. The current trend points toward a continued tightening of saleable homes. The first time home buyer incentive of $8,000 tax credit is creating demand for housing. Interest rates are at the lowest they have been in many years. Mortgage programs have seen some tightening of requirements but are plentiful for buyers with acceptable credit scores. Mortgage rates are tied to 10 year treasury bills and not the overnight Fed rate which gets all the media attention. Sellers need to make sure that their homes are in top condition and well priced to attract a buyer. Those homes that are not in top condition and are not well priced are helping those sellers whose homes are in good condition and are appropriately priced to get their homes sold. Remember buyers purchase homes based on location, price and condition. Sellers have control of the condition of their home and with so many homes on the market; condition becomes a major deciding factor with buyers when making an offer to purchase.
(Detailed statistical reports were generated from data supplied by the Evansville Area Assoc. of Realtors which is available upon request. Send your request to info@evvareahomes.com.)
