Less than 30 days and we will be into spring. Can you believe it? As I am writing this snow is falling and expected to pile eight more inches onto a driveway and walkway that are sick of the sound of my snow blower. Shouldn’t we be waiting for the season’s first bloom and not another appearance from the ever-present snowplow? Come on—show me a sign. When can we visit the Spring Banks at Winterthur?
The spring market sets the stage for real estate sales for the entire year. Last year was a disastrous start weather-wise but the federal incentive program bolstered sales through April 30. Once the incentive stopped, so did the real estate sales. 2011 is a new year and this is a new spring. The weather will soon be heating up as will the real estate market. There are economic indicators pointing to an upward curve. We don’t yet know the full extent of the fallout from the Wilmington Trust layoffs and the speculation is that there will be several hundred more. Here is another sign. It makes you wonder how a bank so anchored in our business community can fall so quickly. I also cannot understand how the leadership can leave with millions of dollars in golden parachute money while others stand a chance of losing everything they have worked for. What about the former leadership? What was there role in the collapse? This has and will affect our spring. This is a sign that doesn’t look good for our already strained market. How about another sign?
They are demolishing the former Chrysler building in Newark and getting ready to expand the University of Delaware. The expansion will bolster our local economy by providing jobs, transferees and homebuyers. This is a good sign. In the past three weeks, buyers are coming on strong. Chalk it up to pent-up frustration, low rates or high inventory or a host of other guesses. We don’t need to get paralysis by analysis. Rather, let’s enjoy the spike in activity and pray it will continue.
Here are the numbers for January. Inventory is up to 3,256 units compared to 2,883 from the same time last year. 226 properties settled compared to 242 last year. The list price to sales price continues to hover around 2 percent less than last year going from 91.28 percent in 2010 down to 89.41 currently. What is the cause of the drop this time, which by the way is an overall drop of 3 percent in our market? The rate has started to inch up a bit so hopefully “fence-sitters” who were waiting for the bottom and have missed it will be ready to strike. At this time in our market it is still a combination of a beauty contest and price war. In other words, the prettiest homes with the most attractive prices will be heading to “sold” very soon.
Another interesting statistic is that the number of persons living in a household has increased over the last five years by almost two. The significance of this is that many children are moving back with their parents due to loss of work, the inability to secure work or just to save additional money and in turn help their parents. Add the grandparents to the equation and you have a multi-generational household that can be pretty challenging. This evolution has been occurring since 2005. The steady increase of households gives me a visual of a pressure cooker ready to blow. At some point critical mass will happen and at that time, we will be ready to show the weary outcasts the serenity of a new home. Given the inventory is at an all-time high, what better time to make a move? The economy will bounce back. The grandparents will migrate to a retirement community or head south following signs for the ultimate “early bird” special. (The signs get bigger the farther south you travel.) Rumor has it that South of the Border is offering strained food.
Eventually, things will return to normal. I mean the “new” normal. Regular folks will be able to purchase or sell a home, mortgage companies will actually be lending money and values will start on the upswing. We who are practicing Realtors that have been in the business for more than 20 years all recite the same prayer at the end of our day. It goes like this: Dear Lord, please give us a market like 2004 and I promise not to waste it this time. Amen.
Truth be told, it is going to take more than prayers to resurrect the real estate market. It is going to take hard work, vision, cooperation and bi-partisanship from our elected officials, the banking community and financial institutions, all without adding greed and avarice into the mix. (Good luck with that one.)
In order to repair the broken systems in our real estate market, people are going to have to start thinking outside the box. We need to redefine how money is borrowed and used for the purchase of a home. We need to require the buyer to have more “skin in the game.” Fee structures have to change so that no one in the transaction benefits from hidden fees. Full disclosure is a must. Lastly, if and when this gets fixed, the government should let the free enterprise system work and quit bailing out “selected” industries.
Show me a “SOLD” sign this spring. Show me a “HIRING, APPLY WITHIN” sign this spring. Show me a “MORTGAGE MONEY AVAILABLE” sign this spring and show me a postcard that says, “JUST MOVED.” These will be as welcome as daffodils, pansies, lilies and tulips. Let’s hope that jobs are created as quickly as flowers bloom. This will be pointing us in The Right Direction.
For additional numbers, statistics or general information on our local, regional or national real estate market, call us at 221-7300.