What is Really Happening to Home Prices in Delaware County?

WHAT IS REALLY HAPPENING TO HOUSE PRICES IN DELAWARE COUNTY?

Periodically, I try to publish local real estate statistics that shed some light on what is really going on in the local real estate market.

I recently took a look at what has happened and is happening to the price of a single family house in Delaware County. Some of what I found may surprise you.

First of all, it is a common belief that home prices hit a peak in 2006 or 2007 and have declined since then.

That is generally true, but the magnitude of the change is kind of surprising. For example, just ten years ago in 2000, the average price of a single family house in the country was $160,000. By 2007, that climbed to and peaked at $273,000. That is an average annual increase of right at 8%, which is high and unsustainable in the long term. The average annual increase in house prices in the United States is about 3%.

The common belief is that that real estate prices have collapsed since then, but is that really true?

Please check out the below (Courtesy of Trend, MLS).

• Since prices peaked at $273,000 in 2007, they came in at $267,000 in 2008, $250,000 in 2009 and actually rebounded to $261,000 in 2010.
• That is a cumulative decline of only 4.5% since the peak. Not fun for a seller, but a long way from the 50% declines that are real in places like Florida and California.
• By way of comparison, a "normal" real estate price correction is in the area of 10-20%.

Does this mean that we have gone through the decline and that prices are now ready to rebound? Well probably not, and for these reasons.

• Inventory of houses for sale in the county was at or below 1,800 units until May of 2005.
• Sales in 2005 were 7,129 houses
• In 2010, the average inventory was 3,542 units or more than double that of May, 2005.
• Sales in 2010 were 4,171 units.
• Stated differently, supply (inventory) is up by more than 100%.
• Demand (sales) is down by 41%.
• Prices are driven by supply and demand. When supply is up and demand is down, prices go down. Overall, that is what we have seen and probably will continue to see for the next year.

If you would like more specific information  about what has happened to house prices in the immediate area around your house, just let me know and I will be glad to develop it for you.

Thanks and please let me know if there is anything else that I can do for you.