Evansville Real Estate Market Continues to Improve
Posted by remaxservices on June 7, 2009
Evansville Real Estate Market Continues to Improve
June 5, 2009
The local real estate market continues to show signs of improvement with increasing numbers of homes sold and increases in the average selling price. Buyer activity, especially among first time home buyers deciding to take advantage of the $8,000 tax credit and low interest rates, has spurred on sales. May 2009 closed sales of 290 homes were equal to May 2008 sales and were up 8% from April 2009. In May 2009 the number of homes on the market decreased for the ninth month in a row to 2103 homes – the lowest level since May 2006. June 2009 home sales are expected to be up from May 2009 home sales based on the number of homes that are reported to have accepted contracts. The average unit selling price for May 2009 of $135,833 was up over 10% from 2008’s average of $122,786, and is up 12% from May 2008’s average price of $121,634. 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 climbed back up to 96% in May 2009 compared to the normal list to sale price range of 94% to 96% which indicates some discounting of list price in May. The factor that has the greatest impact on the market is the number of homes that are for sale. In May 2009 there were 2103 homes on the market. May 2008 had 2537 homes in inventory and the average for 2008 was 2601 homes. In May 2009 the absorption rate decreased to 7.3 months after 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. On the negative side: consumer confidence continues to be low and unemployment continues to climb. On the positive side: the government is taking aggressive steps to stabilize the economy, interest rates are 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, indications are that 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 193 homes were sold in May 2009 which is up 2.1% from May 2008 and up 11% from April 2009. The average sales price for May 2009 was $132,932 which was up 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. May 2009 had 1330 homes for sale compared to 1661 for May 2008 and 1366 for April 2009. May 2009’s absorption rate decreased to 6.9 months from 14.7 months in January 2009 and from 11.4 months in November 2008.
Newburgh and Warrick County
May 2009 home sales of 62 homes were down 5% from May 2008 home sales of 65 homes but up 5% from April 2009 home sales. The average sales price for May 2009 was $160,818 compared to 2008’s average of $172,481. The sell to list ratio was 96%. May 2009 home inventory is at 447 homes compared to May 2008’s inventory of 539 homes and April 2009’s inventory of 435 homes. The May 2009 absorption rate was 7.2 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 May 2009 of 21 homes were equivalent to May 2008 sales of 19 homes and April 2009 sales of 23 homes. The average unit sales price for May 2009 was $83,119 compared to 2008’s average of $95,500. The list to sell ratio remains in the 93% to 95% range. May 2009 home inventory is at 179 homes which is down from May 2008’s home inventory of 248 homes and April 2009 home inventory of 193 homes. May 2009’s absorption rate was 8.5 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 May 2009 of 14 homes were equivalent to May 2008 homes sales of 16 homes and April 2009 home sales of 12 homes. The May 2009 average unit sales price was $144,250 compared to 2008’s average of $112,715. Posey County’s home inventory for May 2009 of 147 homes is down from May 2008 home inventory of 153 homes and April 2009’s home inventory of 141 homes. The absorption rate in Posey County for May 2009 is at 10.5 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.)
