Latest Numbers Show Market Hitting Its Stride

By Ryan Dosen

TReND MLS just released its latest numbers for Chester County’s real estate market and we are seeing further confirmation that home buyers are making up for lost time during the rough winter months. While the year-to-date numbers are nothing to write home about (we’ve seen 1785 closed transactions in 2014 compared to 1961 for the same time period last year), a closer look at the numbers gives us reason to believe that we will make up some, if not all of that lost ground.

 

Surging Toward the June Juggernaut

In Chester County, June is traditionally the biggest month for single family home settled transactions. Over the past 9 years, only November of 2009 managed to eke out a (5 home) victory over the June juggernaut. During summer, the temperatures rise, and Chester County sells homes. June begins a 3-month period that usually dwarfs the rest of the year when it comes to people signing on the dotted line to buy a house.

My father was a certified financial planner and he taught me the old adage for stocks that you should “sell in May and go away.” Though he did not make it a habit to dump all his securities every May and buy them back on Halloween, he told me that many people would sell their stocks for the summer and buy them back in the fall. He said that they did this because people would be on vacation, trading volume would be down, and historically, stocks just didn’t appreciate much during the summer.

Many people look to buy and sell homes during the summer as well, but for different reasons. Some people are trying to properly situate their families between school sessions. Others have simply waited out winter and finally come to the end of the months-long process of looking for homes, coming to an agreement, and passing the couple months it usually takes to finally close on a home. Our winter was especially brutal and kept people inside more than normal. This column projected last month that we would see a bigger jump in home sales between April and May of 2014 than we saw in 2013. The reason was that buyers would be making up for lost time.

TReND MLS’ May 2014 numbers for Chester County have confirmed our prediction. May 2013 saw a 23% jump in settled transactions compared to April of 2013; May 2014 saw a 34% jump in settled transactions compared to April of 2014. June 2013 then saw numbers increase by another 26 percent. We’re not expecting to see June 2014’s numbers reflect a proportional 38% increase in home sales, but we do expect June 2014’s settled transactions to be strong and to at least match the 26% increase we saw last year.

 

Rates Still Low

All of this increased activity is also coming at a great time for buyers. Freddie Mac said on Thursday that the average rate for a 30-year loan declined to 4.17 percent from 4.20 percent last week. These rates are about a quarter point higher than they were at the same time last year, but are much lower than the numbers projected when the Federal Reserve announced the tapering of its bond buying program last December.

Rates will most certainly rise again. When rates will rise again, however, is anyone’s guess. For what it’s worth, Bloomberg has compiled futures data that reflects a 93 percent chance that the Fed will not be raising its federal funds target rate from the zero to 0.25 percent range it has been maintaining since 2008. Read: a significant rise is probably not imminent.

Momentum in the Real Estate Market

Despite the rough start experienced this year in the real estate market, we are seeing some significant signs of increased momentum headed into our busy summer months. If you didn’t sell in May and go away, then sell in July or August and go away for vacation…but come back. It’s nice here. We don’t have Mickey Mouse, but Mickey often comes with 95 degree weather, 99 percent humidity, and daily, violent thunderstorms. It gets old. I know. I lived it. I went away.

 

– Ryan Dosen manages The Wayne Megill Real Estate Team of Keller Williams Brandywine Valley in West Chester, PA. For buyer or seller representation, or for more perspective on the local and national real estate market, please email rdosen@megillhomes.com and visit The Wayne Megill Team blog at http://www.PAHomesAndRealEstate.com.