Real Estate 3rd Quarter Report
Real Estate through the 3rd Quarter
“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” -- Laurence J. Peter (1919 - 1988)
With the first three quarters of 2013 now in the books, and Autumn’s grip on the calendar slipping with each passing day, what should we expect for the real estate market going forward? How is 2013 comparing to recent years? What are the numbers telling us? Let’s take a look.
In real estate analysis, we must look backward to look forward. Looking back over recent years (for comparison to the first three quarters of 2013, and how they compare), we see that in the first three quarters of 2011 there were a total of 279 total transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 270 during 2010 and 172 in 2009. The total dollar amount of real estate changing hands in the first nine months of 2011 was approximately $370 million, while in 2010 it was approximately $445 million and approximately $238 million in 2009. Just by these numbers alone, 2009 was the low point, with 2010 and 2011 showing significant improvement.
In the first nine months of 2012, there were a total of 346 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc) with a total dollar volume of approximately $494 million, up about 24% in number of transactions, and up about 11% in total dollar volume from 2011’s numbers. By comparison, in the first nine months of 2013, there were 340 total transactions, with a total dollar volume of about $478 million, a 2% decrease in transactions and a 3% decrease in dollar volume over 2012’s numbers for the same period. So, simply based on comparisons to recent years, we saw the bottom in 2009, a rebound of sorts in 2010 through 2012 and an overall slow continuation of this trend at the present time. Admittedly it is still too early in 2013 to take much real significance from these numbers.
Foreclosures and foreclosure related transactions made up approximately 7% of the overall market in 2010, with approximately 35 foreclosures and foreclosure related sales taking place. This unfortunate statistic continued in 2011, showing some signs of slowing, with an estimated 23 foreclosures and foreclosure related transactions taking place, making up about 2% of the market in 2011 (based on dollar volume). For 2012, there were an estimated 35 foreclosures, representing approximately 3% of the market based on dollar volume. So far in 2013, we’ve seen an estimated 8 foreclosures, representing about 1% 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 2012, the average home sale was $1.854 million, up about 13% from the average home sale for all of 2011. Further, there were 42 sales over $3 million, with 19 of those over $5 million, and 5 over $10 million in 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. The average sale in the $500,000 to $999,000 range was $749,000, up 6% from 2011’s numbers. At the end of September 2013, the average home sale was $1.77 million, down about 4% from the average home sale in 2012. So far in 2013, there have been nine home sales over $5 million, with four of those over $10 million, representing 19% of the market by dollar volume.
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. In 2012, there were 83 vacant lot sales, with an average sale price of $1.375 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). As of the end of September 2013, there were 60 vacant lot sales, with an average lot sale of $842,000, down about 39% from the average lot sale in 2012.
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. In 2012, 58 single-family permits were issued in 2012, a modest increase over 2011. As of the end of September 2013, there have been 83 single-family permits issued, for a projected annual rate of 111 at the current pace, a significant increase over recent years. The general feeling in the market is that building has begun to return and these permits numbers bear witness to that.
Overall sales volume (number of transactions) and dollar volume of those sales are down slightly through September 2013, compared to 2012’s numbers. How this will translate into overall yearly numbers for 2013 remains to be seen. Stay tuned.