DIANE & DAVE ILIFF, REALTORS®

First Quarter 2010 Review - Cecil County, MD Housing Market

Despite the disruption in business due to the record area snowfall, the housing market in Cecil County rebounded in March and ended the 1st quarter of 2010 with an increase of 29% in the number of properties that went under contract compared to this time last year. In addition, the number of sold properties increased by10% for the same time periods. Average home prices remained unchanged with the median home price declining 5%. The number of homes for sale increased by 8% (chart 1).  Buyers have begun to return to the market taking advantage of the affordable supply of homes for sale, low mortgage rates, and the extension and expansion of the home buyer tax credit.

MARKET OVERVIEW

Looking at the local markets within Cecil County provides us with further insight. With the exception of Northeast and Rising Sun, pricing declines range from 10% in Perryville to 41% in Conowingo.  With so few transactions in most areas though, the data is easily distorted by low or high dollar transactions (chart 2).

SUPPLY vs. DEMAND

Market conditions vary within the geographic area and also within price points. A good barometer of market conditions is months’ of inventory which indicates how long it will take to sell the existing supply of homes at the current sales rate. Generally speaking, in a balanced market there is approximately five to six months’ supply of inventory.  A supply of less than five to six months generally favors sellers; there are more buyers in the market than homes for sale. Above that level, market conditions may be more favorable for buyers; there are more homes for sale than there are willing and able purchasers.  In Cecil County, homes priced $250,000 and below account for nearly 65% of the sales activity compared to 68% in the same quarter last year. It appears that the move up buyer has been active in the market as well; the area experienced a 23% increase over last year in the number of homes sold at the $250,000 to $400,000 price point.  As a potential home buyer, you can gain an understanding of the market by looking at supply and demand in the price range in which you would like to purchase (chart 3).

MARKET BAROMETERS

In addition to supply and demand, economists follow three other housing market indicators to assess the direction and overall health of the market: the number of new listings coming on the market; the average number of days it takes a home to sell; and the sales price as a percentage of the original list or “asking price.”  

For the first three months of 2010, there is an 8% increase in the number of newly listed properties (chart 4) when compared to this time last year. Sellers are returning to the market somewhat more confident in their understanding of what it will take to attract a buyer for their property.

The average days on market prior to sale (chart 5) declined by 32% from this time last year, averaging 129 days vs.189 days. This downward trend over the last six months in comparison to prior year is a positive indicator.

Finally, homes are selling with reductions from the original list price often referred to as “listing discount” (chart 6). The improvement in this indicator suggests that sellers are listening to the market when setting their list price - the gap between buyer and seller during price negotiation has improved from this time last year.

Buyers have returned to the market – as listing prices have declined, sales have increased (chart 7).  March 2010 saw a 62% increase in new contract activity compared to March 2009; buyers are likely seeking to take advantage of the home buyer tax credit that expires on April 30, 2010 and low mortgage rates that are expected to rise to 6% by year end.

Overall these indicators point to the expected slow recovery of our local housing market. If you are a seller, setting a realistic list price for your property is critical to a sale in today’s environment. If you plan to purchase a home, know that mortgage rates are expected to rise so waiting for prices to fall may end up costing you more.
 
At Patterson-Schwartz, we have helped people buy and sell in every kind of market. We welcome the opportunity to provide you with the guidance and strategy necessary to successfully navigate a real estate transaction in today’s environment. 

(All reports presented are based on data supplied by MRIS. MRIS does not guarantee nor is it responsible for its accuracy. Data maintained by the MLS may not reflect all real estate activities in the market. Information is deemed reliable but not guaranteed. Data is as of 04/11/2010)