August 8, 2009
Evansville Real Estate Market Takes A Breather in July
The local real estate market took a breather in July after 5 continuous months of increases in the numbers of homes sold. 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. July 2009 closed sales of 305 homes were down 6.7% from June 2009 and July 2008 sales. In July 2009 the number of homes on the market was 2202 homes – which is comparable to previous months in 2009. August 2009 home sales are expected to be up from July 2009 home sales based on the number of homes that are reported to have accepted contracts. The average unit selling price for July 2009 of $124,993 was up 2% from 2008’s average of $122,786, but down 5% from July 2008’s average price of $131,869. 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 July 2009 which indicates some discounting of list price in July. The factor that has the greatest impact on the market is the number of homes that are for sale. In July 2009 there were 2202 homes on the market. July 2008 had 2580 homes in inventory and the average for 2008 was 2491 homes. In July 2009 the absorption rate was at 7.2 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. On the negative side: consumer confidence continues to be low. On the positive side: the government is taking aggressive steps to stabilize the economy, unemployment rates are starting to level off, the stock market continues to recover, 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, 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 184 homes were sold in July 2009 which is down 12% from July 2008 and down 15% from June 2009. The average sales price for July 2009 was $116,549 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. July 2009 had 1428 homes for sale compared to 1635 for July 2008 and 1410 for June 2009. July 2009’s absorption rate was at 7.2 months compared to 14.7 months in January 2009 and 11.4 months in November 2008.
Newburgh and Warrick County
July 2009 home sales of 73 homes were down 5% from July 2008 home sales of 77 homes but up 6% from June 2009 home sales. The average sales price for July 2009 was $157,302 compared to 2008’s average of $172,481. The sell to list ratio was 94%. July 2009 home inventory is at 434 homes compared to July 2008’s inventory of 548 homes and June 2009’s inventory of 463 homes. The July 2009 absorption rate was 6.0 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 July 2009 of 29 homes were up 38% from July 2008 sales of 21 homes and up 7% form June 2009 sales of 27 homes. The average unit sales price for July 2009 was $114,559 compared to 2008’s average of $95,500. The list to sell ratio returned to the normal 93% to 95% range. July 2009 home inventory is at 179 homes which is down from July 2008’s home inventory of 238 homes and June 2009 home inventory of 178 homes. July 2009’s absorption rate was 6.2 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 July 2009 of 19 homes were down 5% from July 2008 homes sales of 20 homes but up 27% from June 2009 home sales of 15 homes. The July 2009 average unit sales price was $98,558 compared to 2008’s average of $112,715. Posey County’s home inventory for July 2009 of 161 homes is equivalent to July 2008 home inventory of 159 homes and June 2009’s home inventory of 153 homes. The absorption rate in Posey County for July 2009 is at 8.5 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.)
