It is really hard to believe that it is September, already.  It seems like the summer just started!

This past Monday, of Labor day weekend, Lower Makefield Township, which is the township that surrounds the small boro of Yardley, celebrated its annual community day.  It was an absolutely gorgeous late summer day, and the turnout was fantastic.  The community support for this event is tremendous, and is an example of why this area is such a wonderful place to live.  It is really fun to meet and greet friends and neighbors of all ages, at this community wide event.  There are activities and events for all age groups, ranging from rides for young children, to a 3 on 3 basketball tournament,  to music and food from all sorts of area bands and vendors. 

What a great way to spend the last lazy, lingering hours of summer!

As we move through the month of February -- although it does not feel like it at the moment -- we get closer and closer to spring.  The spring market -- well, what we in the real estate industry refer to as the spring market -- begins once the Super Bowl ends.  That means we are in the early stages of what is traditionally the busiest real estate time of the year.  I thought that this would be an appropriate time to review the local real estate market situation in the areas I cover, which is essentially Bucks County in Pennsylvania and Mercer County in New Jersey.

There have been many articles over the past several months in national magazines that have painted a picture of gloom and doom in the real estate market.  Most of those articles discuss the concept of a "real estate bubble."  We experienced such a bubble in the late 80s and early 90s.  Many people who purchased homes in the late 1980s found that when they went to sell several years later their homes had depreciated signficantly in value.  In fact, for those sellers who were highly leveraged -- meaning they put down small amounts of cash -- they had to bring money to closing in order to settle because of the fall in the value of real estate.  The most common question I am asked is whether the so-called bubble in real estate has burst. 

It has been frustrating for me to read many of the local articles about the real estate market, which often use statistics from extremely depressed markets in other parts of the country. They use those statistics as evidence that the market here in Bucks County is in a free-fall decline.  It's true that in parts of the country (i.e., areas in Florida) there has been a serious decline in real estate value.  Many of those areas saw a large amount of speculative buying during the past four or five years as real estate values sky-rocketed.  But in our market here in Bucks County we do have a buyers market although it is nowhere near as dire as the press would have us believe.  Emplyoment in our area is still very strong and there has not been the sort of speculative buying that we have seen in other areas and houses continue to sell every day.  Statistics from 2006, bear this out.

In looking at the market statistics from 2006 for single family homes in the following areas: Lower Makefield Township, Newtown Township, Upper Makefield Township, Solebury Township, Buckingham Township, Northampton Township, the only township that had a declining value from the prior year was Upper Makefield.  In all other markets, the average sold price was higher in 2006 than the previous year.  As the table below shows, the increase ranged from 3.4% in Lower Makefield to 12.6% in Solebury. 

What the table clearly show is that the average price for homes on the market indicates much slower appreciation.  The statistics also show that, for the year, inventory was higher and sales were slower than for the previous year.  That indicates that we are in a buyers market.  Interestingly enough, sales pace actually improved in November and December in terms of sales dollars and units.  Clearly it is more important than ever to be sure that your house is priced correctly, if you are considering selling.  In a buyers market, there are more homes on the market, which means more competition so it generally takes longer to sell. Often homes end up selling at a price that is less than the asking price.  This so-called discount rate actually increased in the fourth quarter meaning that buyers were able to negotiate better prices.  It is critically important to remember that when selling, it is the current market that determines the price of your home.

My personal experience over the past couple of months has been that the market is improving somewhat.  I was actually surprisingly busy in November, December and January.  As we move further into the spring market, as always, the market will be influenced by supply and demand.  Will there be many more sellers than buyers?  We don't know. But if so, the buyers market will get even better for those who are buying.  If we see more buyers coming into the market than sellers, then the market will improve for sellers.  With interest rates still at very attractive levels -- close to all-time lows and with lots of inventory -- it is actually a very good time to be a buyer.  From a seller's perspective, as I mentioned before, be sure to price your home correctly and make sure that it is marketed aggressively and it will sell.  The Bucks County market is nowhere near as dire as the press would have you believe.