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Market Update

 

“Statistics: The only science that enables different experts using the same figures to draw different conclusions.”

-- Evan Esar (1899 - 1995).

Now that the presidential election is behind us, and with varying economic reports coming out all of the time, what are we to think? Who or what should we believe? Let’s take a look at the numbers so far for 2012.

In real estate analysis, we must look backward to look forward. Looking back over recent years (for comparison to the first ten months of 2012, and how they compare), we see that in the first ten months of 2010 there were a total of 325 total transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 222 during 2009 and 241 in 2008. The total dollar amount of real estate changing hands in the first ten months of 2010 was approximately $546 million, while in 2009 it was approximately $327 million and approximately $481 million in 2008. Just by these numbers alone, 2009 was the low point, with 2010 showing much improvement.

For the first ten months of 2011, there were a total of 309 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc) with a total dollar volume of approximately $426 million, down slightly in number of transactions, and down in total dollar volume from the same period in 2010. By comparison, in the first ten months of 2012, there were 411 total transactions, with a total dollar volume of about $599 million, a 33% increase in transactions and a 41% increase in dollar volume over the same period in 2011. So, simply based on comparisons to recent years, through October, we saw the bottom in 2009, a rebound of sorts in 2010, a slight settling back (mild ‘double bottom’) in 2011 and now a seemingly stronger rebound of sorts well into 2012.

Foreclosures and foreclosure related transactions made up approximately 6% of the overall market in 2009, with approximately 25 – 30 foreclosures and foreclosure related sales taking place. This unfortunate statistic continued in 2010, showing no real signs of slowing, with an estimated 35 foreclosures and foreclosure related transactions taking place, making up about 7% of the market in 2010 (based on dollar volume). For 2011, there were an estimated 23 foreclosures, representing approximately 2% of the market based on dollar volume. So far in 2012, we have seen 32 foreclosures, representing about 3% of the market.

The average home sale in 2010, hovered in the $2.2 million range, roughly even with the approximate $2.236 million average home sale for all of 2009, while the median home sale at the end of 2010 was $1.225 million, down about 20% from the $1.538 million median home sale for all of 2009. The average home sale in 2011 was approximately $1.635 million, down about 26% from 2010, while the median home sale was approximately $1.195 million, down about 2% from 2010 levels. These numbers also reflect the fact that there were only 8 home sales over $5 million, representing 13% of the overall market and 2 home sales over $10 million in 2011. Whereas, in all of 2010 there were 23 home sales over $5 million, with eight home sales over $10 million and in 2009, there were 12 home sales over $5 million and 6 over $10 million.

In the first ten months of 2012, the average home sale was $1.844 million, up about 13% from the average home sale for all of 2011. Further, there have now been 36 sales over $3 million, with 15 of those over $5 million, and 2 over $10 million as of the end of October 2012, compared to only 27 sales over $3 million for all of 2011 and only 8 over $5 million. Helping to boost the average home sale is the upper end of the market, which now includes two sales over $10 million, so far in 2012. The average sale in the $500,000 to $999,000 range is $735,000, up 4% from 2011’s numbers.

There were 35 vacant lot sales in all of 2009, with an average lot price down about 48% from 2008, which in turn was down about 36% from 2007. Vacant land sales increased modestly in 2010, with a total of 42 vacant lots sold.  The average lot sale in 2010 was up 29% over 2009 and the median lot sale was up 41% compared to 2009. For 2011, there were 43 vacant lot sales, only 1 more than in 2010. As of the end of October 2012, there have been 52 vacant lot sales, with an average sale price of $1.045 million, compared to the 43 vacant lot sales for all of 2011 with an average sale price of $1.853 million (2011’s average vacant land sale was skewed by a $12 million lot sale, as well as an $8 million lot sale and another at $6 million).

2008, on an annual basis, saw the fewest number of new single-family building permits being issued for any year since building permits were first required in 1972. 2009 is now the new record holder for the year with the fewest number of building permits being issued since 1972, with a total of only 44. 2010 ended with a total of 53 new single-family permits being issued, perhaps a glimmer of hope, and 2011 saw 54 single-family permits issued, only 1 more than were issued in 2010. As of the end of October 2012, 46 single-family permits have been issued, a projected annualized total of 55 if this pace continues. The general feeling in the market is that building has begun to slowly return, albeit cautiously.

Overall sales volume (number of transactions) was down about 7% in 2011 versus 2010, and the dollar volume of those sales in 2011 was down about 21% versus 2010. 2012 is much stronger compared to 2011, as we seem to be slowly climbing up from the bottom. As of the end of October, the 2012 market is strongly outpacing 2011’s numbers, however it remains to be seen if this recovery of sorts can be sustained. Stay tuned.