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It is difficult with all the indices quoted in the news to get a clear picture of the real estate market, with various indexes indicating varying statistics. While real estate prices may be down on average from last year in Western suburbs (-2.22%), in Philadelphia the average sales price was up 2%. Average sale prices can be very deceiving as can median sale prices. When an average sales price is lower, it can be caused by an increase in lower end property sales, and a decrease in higher end properties, thus bringing the average down and vice versa. So while average sale price can be helpful in seeing trends, it is not always indicative of what is actually happening in your real estate market.
What's the temperature of America right now? It is an unanswerable question because weather is like real estate... geographically specific. We can see trends within townships buck the trends in the overall county in which the township is located. We can see zip codes and subdivisions have different trends than the township or other municipality (or municipalities) those zip codes are located. To get a true picture of your home's value, you need to look at similar properties, with similar amenities, within a one mile radius that have sold within the past 6 months to a year. Why? Because that is what appraisers do when they prepare an appraisal for a bank. It doesn't matter how much you can get someone to pay for your property, because unless the buyer is paying cash, there is a mortgage company involved that now, more than ever, wants to make sure the value arrived at for the property is in line with their appraisal guidelines, guidelines which were in the past relaxed, and as a result are no longer.
GREEN Money! Lending institutions are increasingly offering advantages for homeowners who are buying energy efficient homes or taking out Home Equity Lines of Credit (HELOCs) to make green improvements to their existing homes.
Energy Efficient Mortgages: From a lender's perspective - a home is certified to be "Energy Efficient" after it has been certified by an accredited rater under the National Home Energy Ratings Standards using either the HERS (Home Energy Rating Standard) or BOP (Builders Option Package). More information on HERS or BOP can be found at www.resnet.us. If you do peruse this site - be aware that some of the information related to the appraised value is a touch old, and not very useful.
The value of this rating to a home buyer is that the energy savings directly imputes into income. For example, if a home gets an Energy Savings Value of $3,000 / year, we add this amount to your yearly income. That means you would qualify for a higher loan amount! Using very rough numbers this translates into:
$2,000 (mortgage payment) / month @ 6.75% = $308,300 mortgage. $2,250 (mortgage payment with energy savings included) / month @ 6.76% = $346,900 mortgage. An increase in $38,600! This is the power of that Energy Savings Value. Green adds Green!What about the credit crunch? We have not seen from our own lender any decreased ability to fund loans to our clientele. If you do your homework, or have your REALTOR refer you to a mortgage company they know has money to fund, and if you are qualified, there are mortgage companies that have money to lend at very good rates. Interest rate volatility in the mortgage market is at an all time high so if a rate is quoted, you could be looking at a half a point difference in rates offered the next day, or even intraday. This can be in your favor, if rates dip you can then lock at an even lower rate, or not in your favor if rates jump the next day. Rates remain, even at the high end of the volatility, historically low.
Foreclosures and Short Sales: The ultimate GREEN opportunity!
Chances are that if you buy a foreclosed property, or one that is avoiding foreclosure, you have either bought it at under market rates or bought a house that needs some improvements. In either case you can start to look into the energy saving and "green' home improvement opportunities. Making these improvements that need to be made one way or another with a "green' mindset can make the home much more marketable and potentially more valuable down the road when you decide to list the property. This can be as simple as energy efficient lighting, energy efficient appliances, programmable thermostats, as well as more big ticket "green' items such as energy efficient windows and instant hot water heaters powered by solar panels. When two buyers are comparing two like homes, one more energy efficient than the other, the more energy efficient home will likely be the buyers choice.
Money Talks! - Good News on Tax Credits: The new "Emergency Economic Stabilization Act of 2008", signed into law on October 3, 2008, provides a significant tax credit for homeowners by lifting the previous cap. After December 31, 2008, the previous $2,000 cap will be removed for Solar Photovoltaic systems (but not solar water heaters) giving homeowners the full 30% tax credit. This credit is also completely separate from the $500 home improvement credit bill which has extended tax credits for energy efficient home improvements like windows, doors, roofs, insulation, and HVAC.How about foreclosures in our market? There is an increase in foreclosures, however many of the foreclosures that are hitting the news headlines are concentrated in areas that saw a dramatic spike in home prices or areas that saw an overutilization of subprime borrowing or over building. While Philadelphia and the western suburbs such as the Main Line have seen an increase in short sales or foreclosed properties, where subprime borrowing or riskier prime borrowing occurred, it was not as rampant as in other more speculative markets such as those in California, Nevada and Florida. According to the latest report put out October 23rd by RealtyTrac.com, the largest web aggregator of foreclosure and pre-foreclosure information, six states accounted for more than 60% of foreclosure activity in the third quarter of 2008, Pennsylvania not being one of them. In fact, PA was ranked 68th out of 100 metro markets that realtytrac.com monitors, with much of that foreclosure occurring in the harder hit middle areas of the state.
Real Estate is not a liquid market, but many investors on Wall Street and investors on Main Street have begun to see it as a liquid market. It was not too many years ago that a 30-day marketing period was seen as long! With the correction in the housing market also came a correction in marketing periods to where they were pre-boom. We have seen over the past few years, on average, a steady increase in Days on the Market, which means that properties are selling; they are just taking slightly longer to do so. We are also seeing a decrease in the sales price to offering price ratio, which means that sellers and buyers are negotiating to find value more than in years past.
Most recent statistics are below and the data is pulled directly from the area's TReNd Multiple Listing System with comparisons to last year. The DOM, Units Listed and Units Pended tell us more than any other column (including average price) and is usually what I focus on when determining trends.
- Information provided by David Bershad, President of RE/MAX Executive Realty a full service brokerage serving the entire upper and lower Main Line and beyond for consumers real estate, mortgage and title needs. 610-520-0400
- Mortgage information provided by Viren Kapadia of Guaranty Northeast Mortgage Company, 610-828-9950
Residential Main Line area Townships
YTD - 9/30/08 |
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Units Listed |
Listed Volume |
Listed Avg |
Pended |
Units Sold |
Sold Volume |
Sold Avg |
Avg DOM |
L Merion |
1296 |
$1,155,491,641.00 |
$891,583.00 |
529 |
530 |
$354,622,362.00 |
$669,098.00 |
70 |
Last Year |
1386 |
$1,220,771,555.00 |
$880,767.00 |
705 |
688 |
$455,750,937.00 |
$662,428.00 |
73 |
% change |
-6.49% |
-5.35% |
1.23% |
-24.96% |
-22.97% |
-22.19% |
1.01% |
-4.11% |
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Haverford |
768 |
$303,613,705.00 |
$395,330.00 |
459 |
433 |
$143,819,814.00 |
$332,147.00 |
55 |
Last Year |
874 |
$325,543,230.00 |
$372,475.00 |
557 |
558 |
$180,077,967.00 |
$322,720.00 |
52 |
% change |
-12.13% |
-6.74% |
6.14% |
-17.59% |
-22.40% |
-20.13% |
2.92% |
5.77% |
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Radnor |
481 |
$419,813,123.00 |
$872,792.00 |
225 |
222 |
$157,755,040.00 |
$710,608.00 |
76 |
Last Year |
514 |
$442,165,290.00 |
$860,243.00 |
273 |
280 |
$213,117,159.00 |
$761,132.00 |
67 |
% change |
-6.42% |
-5.06% |
1.46% |
-17.58% |
-20.71% |
-25.98% |
-6.64% |
13.43% |
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Tredyffrin |
675 |
$357,204,411.00 |
$529,191.00 |
381 |
353 |
$163,538,062.00 |
$463,280.00 |
60 |
Last Year |
681 |
$357,131,563.00 |
$524,422.00 |
398 |
413 |
$198,339,333.00 |
$480,240.00 |
56 |
% change |
-0.88% |
0.02% |
0.91% |
-4.27% |
-14.53% |
-17.55% |
-3.53% |
7.14% |
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Easttown |
238 |
$244,282,888.00 |
$1,026,398.00 |
112 |
109 |
$87,328,860.00 |
$801,182.00 |
64 |
Last Year |
250 |
$228,896,798.00 |
$915,587.00 |
148 |
145 |
$104,256,806.00 |
$719,012.00 |
66 |
% change |
-4.80% |
6.72% |
12.10% |
-24.32% |
-24.83% |
-16.24% |
11.43% |
-3.03% |
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U Merion |
431 |
$210,544,231.00 |
$488,501.00 |
233 |
214 |
$67,984,864.00 |
$317,686.00 |
79 |
Last Year |
461 |
$196,595,735.00 |
$426,454.00 |
255 |
253 |
$99,451,961.00 |
$393,090.00 |
68 |
% change |
-6.51% |
7.10% |
14.55% |
-8.63% |
-15.42% |
-31.64% |
-19.18% |
16.18% |
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Narberth |
67 |
$29,150,247.00 |
$435,078.00 |
43 |
41 |
$15,362,401.00 |
$374,692.00 |
75 |
Last Year |
80 |
$33,745,350.00 |
$421,816.00 |
43 |
39 |
$15,717,650.00 |
$403,016.00 |
27 |
% change |
-16.25% |
-13.62% |
3.14% |
0.00% |
5.13% |
-2.26% |
-7.03% |
177.78% |
Above Townships Combined
YTD 9/30/08 |
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Units Listed |
Listed Volume |
Listed Avg |
Pended |
Units Sold |
Sold Volume |
Sold Avg |
Avg DOM |
Combined |
3750 |
$2,622,582,815.00 |
$699,355.00 |
1945 |
1863 |
$972,295,234.00 |
$521,897.00 |
65 |
Last Year |
4025 |
$2,684,166,669.00 |
$666,873.00 |
2315 |
2311 |
$1,233,464,313.00 |
$533,736.00 |
62 |
% change |
-6.83% |
-2.29% |
4.87% |
-15.98% |
-19.39% |
-21.17% |
-2.22% |
4.84% |
Residential Philadelphia Market
YTD 9/30/08 |
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Units Listed |
Listed Volume |
Listed Avg |
Pended |
Units Sold |
Sold Volume |
Sold Avg |
Avg DOM |
Philadephia |
23852 |
$5,176,714,860.00 |
$217,034.00 |
10082 |
9729 |
$1,860,243,025.00 |
$191,205.00 |
71 |
Last Year |
27727 |
$5,869,432,745.00 |
$211,686.00 |
12627 |
12460 |
$2,334,581,177.00 |
$187,366.00 |
65 |
% change |
-13.98% |
-11.80% |
2.53% |
-20.16% |
-21.92% |
-20.32% |
2.05% |
9.23% |
*Data collected from TReND Multiple Listing Service (2008 & 2007) deemed reliable but not guaranteed. This information is provided as a courtesy only. It is believed to be true but is not warranted. All information is subject from errors, omissions and change. Data may not reflect all activity in the market, outside of the MLS.
To contact David Bershad directly Click Here.
To visit the RE/MAX Executive Realty website Click Here.
To specifically see the 'Green Group' agents within RE/MAX Executive Realty Click Here.