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2013 Year-End Market Review

2013 Market Wrap-Up

“It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time.” -- Sir Winston Churchill (1874 - 1965)

 With 2013 now in the books, what do the numbers show us? Can we take anything away from what the market is telling us? What should we expect for the real estate market going forward? How does 2013 compare to recent years? Let’s take a look.

 In real estate analysis, we must look backward to look forward. Looking back over recent years (for comparison to 2013, and how they compare), we see that in 2011 there were a total of 384 total transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 415 during 2010 and 300 in 2009. The total dollar amount of real estate changing hands in 2011 was approximately $542 million, while in 2010 it was approximately $690 million and approximately $445 million in 2009. Just by these numbers alone, 2009 was the low point, with 2010 and 2011 showing significant improvement.

In 2012, there were a total of 546 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc) with a total dollar volume of approximately $834 million, up about 42% in number of transactions, and up about 54% in total dollar volume from 2011’s numbers. By comparison, in 2013, there were 506 total transactions, with a total dollar volume of about $754 million, a 7% decrease in transactions and a 10% decrease in dollar volume over 2012’s numbers. So, simply based on comparisons to recent years, we saw the bottom in 2009, a sort of “bouncing along the bottom” or “two steps forward, one step back”, with an overall slow upward continuation of this trend at the present time. If this trend continues, it is likely that 2014 may continue upwards somewhat.

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. In 2013, there were an estimated 12 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 2013, the average home sale was $1.94 million, up about 5% from the average home sale in 2012. Additionally, in 2013 there were 17 home sales over $5 million, with eight of those over $10 million, representing 24% of the market by dollar volume; as compared to 2012 which saw only 21% of the market comprised of home sales over $5 million.

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 2013, there were 89 vacant lot sales, with an average lot sale of $792,000, down about 42% 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. In 2013, there were 108 single-family permits issued, a significant increase over recent years. The general feeling in the market is that building has begun to return and these permits numbers certainly bear witness to that.

 Overall sales volume (number of transactions) and dollar volume of those sales are down in 2013, compared to 2012’s numbers. The numbers for 2013, in comparison to recent years, show a market generally increasing from the lows of 2009, but doing so in much the same way a train starts off from the station, jerking awkwardly at first, but gradually gaining momentum. Stay tuned.

 -Rob Ranney