Two very interesting things are happening in the Warren County and Front Royal housing market. The first is that inventory is getting tighter and both closed and pending sales are increasing. The second interesting fact is that properties are staying on the market longer, causing prices to to fall. Typically, you would not find both instances occurring. As supply decreases and sales continue to increase, prices would normally rise and days on the market (DOM) would decline. However, the opposite is happening. The main reason is this is not a normal market—so buyers are not dealing with traditional sellers. An added factor is that banks and asset managers are thrown into the recipe by the way of short sales and REO properties on the market. Secondly, the government has gotten involved. There are now required approaches to keep the defaulting borrower in the property and prolonging eventual foreclosure, which would add to inventory. The following statistics were reported in Warren County for the month of September 2009.
- New listings: 87
- Closed sales: 48
- Average sale price: $161,900
- Average DOM: 125
- Total inventory: 456 units
The number of new listings last month are down by more than 12% from September 2008. While closed sales and pending sales increased by 33% and 31.4% respectively, the average sale price declined by almost 16%. Also, the percentage of original list price received at sale only fell by about 2% from last September.
Comparing last year’s totals to this year’s, new listings have dropped 13.7%. Closed sales have increased by over 29%, and pending sales have also increased, by 44%. The average sale price in Warren County year to date has dropped almost 27% to a mere $153,000.
The short sale process is lengthy and the cause for increases in pending sales. The low volume of new listings is due to the try and modify approach before listing as an REO. Take these factors out and prices would fall, inventory would increase, and buyers would began to gobble up the inventory. Eventually price levels would hit equilibrium and continue on like business as usual. But with current trends, this scenario is not so certain. My recommendation is if you want or need to sell, now is the time to do it. When interest rates go up and prices will fall, which will be when all of these limbo foreclosures will hit the market–further dropping prices. I predict another 15% drop in Warren County, but you would be better in the long run buying now and locking into a lower rate than waiting for the price drop and more than offsetting the cost with a higher interest rate–especially if you plan on living in the house for more than five years.
Market data and commentary provided by Steve Mayes, Managing Broker, Avery-Hess, Realtors.
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