Major Changes in the Real Estate Market
Real estate has increasingly become a hot topic in the Eastern Panhandle, as people from neighboring urban areas have gradually crept and more recently swept into the area, rapidly altering the landscape and the character of the region. To face challenges of infrastructure and land use planning on a community-wide basis, and for those interested in buying or selling their own property, real estate data is helpful.
We know that real estate values have risen dramatically with the demand for permanent and vacation homes, as well as investment opportunities in last season’s bubble market. And it is equally clear that this season that bubble has popped.
According to Shawn Talbot, Senior Editor of Fortune Magazine, the areas across the nation that experienced the biggest “bubble” will experience the biggest contraction. These are the areas on both the East and West Coasts that are affected the most. For the East Coast in particular, it starts with the Washington, DC going north and to the west out to the beginnings of WV. Our area, the Eastern Panhandle, is seeing this downturn in sales, compounded by the bottom falling out of the DC market, making it more difficult to move out of the city.
Here in Morgan Co., the statistics from the Metropolitan Regional Information System (MRIS), our multiple listing service, tells the story: In May 2006, real estate sales for the county dropped in dollar volume by a staggering 54% compared to the overheated market of a year ago! For June, the sales dropped 24%. The trend continued in July with a drop over the previous year of 18%.
Simultaneously, the number of properties on the market compared to a year ago has almost doubled here in Morgan Co. In May 2006, the total number of homes on the market was 217 compared to 119 for the same period in May 2005.
Another interesting statistic is that the number of new houses coming onto the market is exceeding the number of sales in the month of May 2006, having the result of increasing the inventory of houses. In May of this year, the number of houses sold was 16 and the number of new houses coming onto the market totaled 34.
The end result is half the number of buyers, and twice the number of properties on the market. Do the math and you’ll see that is a 4 to 1 ratio of change in the market from a year ago. What was a “Sellers Market” last year has become a “Buyers Market” now.
What does this mean for Sellers? Sellers come in two categories. Those who must sell because of a change in their personal situation, and those who would like to ride the wave and get top dollar for their property. Since the market has peaked, although temporarily (more on this later), those in the first category facing a change in their personal situation, may have to re-evaluate their pricing in order to entice a buyer. Already prices have been dropped on many properties.
And what of those looking to capitalize on high prices? They may want to hold onto their property for awhile. How long? That is the “million dollar question.”
Fortune’s Shawn Talbot predicts that in areas most hit by the bubble, it could take two years and a drop of 20% before the market rebounds. But Talbot’s predictions may not apply entirely here because of the almost unlimited demand to get out of the urban areas and move or retire to the mountains. That was the thinking of the Carl Freeman Co. when they shifted their focus from the crowded seashore to the mountains and bought Coolfont.
Realtors agree that it may take awhile to see a rebound in the slump here in the county, but it will happen. The National Association of Realtors Chief Economist, David Leheah predicts that the shift to a Buyer’s Market nationally, will be short-lived. He thinks pent-up demand will minimize the size of price softening. It all depends on how you define short-lived and a rebound. Many of us in the real estate industry see things returning to “normal”… not the frantic 2005 scenario, but continued growth. And perhaps a temporary slow down is good, giving us a chance to reassess and better manage the changes in the County.
Written by Randall Ashelman, TheGreenRealtors.com
Berkeley Springs, WV Email: 2randall@verizon.net