Wilmington’s Real Estate Average Sales Price Takes a Downward Turn

2009 UPDATE:

Click Here for the lastest Market Reporting on The Wilmington Search!

The local buzz among some Wilmington NC real estate agents in 2007 was the continued climb of the Average Sales Price statistics.

(NOTE:  Many local real estate agents in the Wilmington area use the overall Statistics of the Wilmington Regional Association of Realtors MLS stats which includes several of the rural counties in Southeastern North Carolina.  My statistics focus on New Hanover County and exclude the local beach markets.)

The Upward Climb

Inspite of the slow down in number of sales, the Average and Median Sales price continued to climb in 2007.  But throwing a party and using the word “sizzle” may have been a bit premature.  The law of supply and demand pointed to an eventual downturn in prices.  Notice I said supply and demand and not supply and desire.  Sure, the desire to buy real estate is there and may be pent up, but the signs of demand continued to weaken over 2007.  The reasons for this I will cover at a later time.

The Downward Fall

In the first quarter of 2008, the Average Sales Price was down by 11% when compared to the fourth Quarter of 2007.  The Average Price peaked at an all time high of $299,553 in the 4th Quarter of ‘07.

But the news is not so bad.  When the 1st Quarter of ‘08 is compared to the 1st Quarter of ‘07, the Average Price was only down by 1%.  When compared to the 1st Quarter of ‘06, the Average Sales Price actually rose by 2%.

What’s Happening Now?

Currently, the local market is beginning to take an upward turn in Pendings and Sales.  This could have a positive effect on the Average Sales Price. More important than quarterly and even monthly fluctuations in the Pricing Indices, is the overall average for the entire year for 2008.  Because the 2nd and 3rd Quarters are seasonally stronger markets than the 1st and 4th Quarters, we will need to see how things average out for the year. Home owners should keep in mind that the overall fluctuation in the average price for Wilmington may not reflect market trends in your specific neighborhood.

Will it Continue?

I personally don’t believe we will see an extreme drop in prices here in the Wilmington area over the long haul.  What I do believe is that the lack of buying activity will put pressure on local real estate prices. This is the natural effect of supply and demand. Much of the decline in buyer activity is due to the simple issue of affordability. The markets in which the median price of homes far exceeds the average local wage will experience the greatest correction in pricing. I will dive into the topic of affordability at a later time. But either wages must catch up with prices or prices must come down to an affordable level.

For How Long?

Gary Keller, the co-founder of Keller Williams Realty, projected in his 2008 Vision Speech that a housing recovery could be expected somewhere between 2010 and 2015.  That’s right, 2 to 7 years.  Obviously, that will vary between local markets.

So we’ll wait and see…

In the meantime – stay tuned as we keep an eye on local real estate market trends here in Wilmington North Carolina.

Next, we are going to be looking at the local absorption rate and inventory levels, as well as, Average Days on the Market.  These market statistics will help you understand the “supply” side of the law of supply and demand.

www.WaltDowdy.com