Evansville Area Real Estate Keeps 2008 Sales Pace

October 8, 2009

In September the local real estate market kept pace with September 2008’s home sales pace. Buyer activity, especially among first time home buyers deciding to take advantage of the $8,000 tax credit and low interest rates, continued to be very active. However, that is quickly coming to an end with the cut-off, close date of November 30, 2009. September 2009 closed sales of 296 homes were equivalent to September 2008 sales of 297 homes but down 7% from August 2009 sales of 316 homes. In September 2009 the number of homes on the market was 2195 homes – which is comparable to previous months in 2009. October 2009 home sales are expected to be equivalent to September 2009 home sales based on the number of homes that are reported to have accepted contracts. The average unit selling price for September 2009 of $115,108 was down 6% from 2008’s average of $122,786 and down 4% from September 2008’s average price of $120,537. While the average unit sale price is an indicator of home values, there are other factors which must be considered such as the mix of sales between higher priced homes and lower priced homes. Another item of note is that the list to sale price remained in the 94% to 96% range in September 2009 which indicates some discounting of list price in September. The factor that has the greatest impact on the market is the number of homes that are for sale. In September 2009 there were 2195 homes on the market. September 2008 had 2571 homes in inventory and the average for 2008 was 2491 homes. In September 2009 the absorption rate was at 7.4 months compared to previous highs in January 2009 of 15.1 months and in November 2008 of 12.4 months. There are several important factors that buyers and sellers need to be aware of when considering future real estate transactions. Consumer confidence continues to be low but is improving. The government continues to  take aggressive steps to stabilize the economy, unemployment rates are starting to level off, the stock market continues to recover, mortgage interest rates continue to be low, and home inventories are down-especially well cared for, updated, move-in ready homes.

The real estate market is truly a product of supply and demand. The changes in supply and demand create what is referred to as a Buyer’s or a Seller’s market. The absorption rate is often used as a measure of what is currently being experienced in the real estate market. Absorption rates below 6 are generally considered a Seller’s market and above 6.5 a Buyer’s market. The absorption rate calculates how long it would take the market to absorb or sell all the homes currently for sale at the current sales rate. Prior to 2008 the absorption rate for the four county area was 6 or below. The average for 2007 was 7.8 months and the average for 2008 was 9.2 months. REMEMBER ALL REAL ESTATE IS LOCAL IN NATURE.

Let us now go a step deeper and look at what is going on in each of the four counties as each county has its own story to tell.

 
Evansville and Vanderburgh County

In Vanderburgh County 168 homes were sold in September 2009 which is down 20% from September 2008 sales of 210 homes and down 16% from August 2009 sales of 201 homes. The average sales price for September 2009 was $100,242 which was down from 2008’s average of $110,091. Sell price to list price ratio was 96%. Again the big factor is the number of homes on the market. September 2009 had 1449 homes for sale compared to 1607 for September 2008 and 1460 for August 2009. September 2009’s absorption rate was at 8.6 months compared to 14.7 months in January 2009 and 11.4 months in November 2008.

Newburgh and Warrick County

September 2009 home sales of 77 homes were up 51% from September 2008 home sales of 51 homes and up 12% from August 2009 home sales of 69 homes. The average sales price for September 2009 was $154,100 compared to 2008’s average of $172,481. The sell to list ratio was 95.5%. September 2009 home inventory is at 420 homes compared to September 2008’s inventory of 555 homes and August 2009’s inventory of 421 homes. The September 2009 absorption rate was 5.5 months compared to January 2009’s absorption rate of 14.6 months and November 2008’s absorption rate of 12.8 months.

Princeton and Gibson County

Gibson County home sales for September 2009 of 32 homes were up 60% from September 2008 sales of 20 homes and up 7% from August 2009 sales of 30 homes. The average unit sales price for September 2009 was $101,145 compared to 2008’s average of $95,500. The list to sell ratio was 93.8%. September 2009 home inventory is at 169 homes which is down from September 2008’s home inventory of 240 homes and down from August 2009 home inventory of 186 homes. September 2009’s absorption rate was 5.3 months compared to January 2009’s absorption rate of 18.3 months and November 2008’s absorption rate of 15.9 months.

Mount Vernon and Posey County

Posey County home sales for September 2009 of 19 homes were up 19% from September 2008 homes sales of 16 homes and equal to August 2009 home sales of 19 homes. The September 2009 average unit sales price was $112,052 compared to 2008’s average of $112,715. Posey County’s home inventory for September 2009 of 157 homes is down from September 2008 home inventory of 169 homes and August 2009’s home inventory of 164 homes. The absorption rate in Posey County for September 2009 is at 8.3 months compared to February 2009’s absorption rate of 23.3 months and November 2008’s absorption rate of 24.5 months.

What does all of this mean to buyers and sellers? Buyers remain in an excellent position to purchase. However, Buyers need to be aware of what homes are in inventory, especially well maintained, and competitively priced homes. The current trend points toward a continued tightening of saleable homes. The first time home buyer incentive of $8,000 tax credit has created demand for housing. However, the incentive is quickly coming to an end. The sale must close by November 30, 2009 which means that the property needs to currently be under contract in order to meet the closing deadline of November 30, 2009. Interest rates are at the lowest they have been in many years. Mortgage programs have seen some tightening of requirements but are plentiful for buyers with acceptable credit scores. Mortgage rates are tied to 10 year treasury bills and not the overnight Fed rate which gets all the media attention. Sellers need to make sure that their homes are in top condition and well priced to attract a buyer. Those homes that are not in top condition and are not well priced are helping those sellers whose homes are in good condition and are appropriately priced to get their homes sold. Remember buyers purchase homes based on location, price and condition. Sellers have control of the condition of their home and with so many homes on the market; condition becomes a major deciding factor with buyers when making an offer to purchase.

(Detailed statistical reports were generated from data supplied by the Evansville Area Assoc. of Realtors which is available upon request. Send your request to info@evvareahomes.com.)