Joe Sheehan, ABR, SRES

Today is Thanksgiving day, and as I have been doing for the last 35 years or so, I will go to visit my Mother. This year, we won't be having Thanksgiving dinner at Mom's house, we'll be going to a relatives home and enjoying the feast with the extended family. For all but a handful of my 54 years, Mom put the Thanksgiving feast on the table. The clan converged on that tiny little house and 20 of us would squeeze around the table that was only designed to seat 10. Of course, the kids would sit at the card table in the living room and their mom's would keep an eye on them. I sat at that card table myself when I was a boy.

I lost my Dad in May of this year. My sister and I are trying to help my Mom decide what to do with that tiny house that they lived in since I was 6 months old. Still in the door jambs are the pencil marks that measure our height as my sister and I grew up. Inside of the closet door of the back bedroom is my sister's crayon masterpiece. The outside of that door was repainted a long time ago but no one looks at the inside of the door, right? That cabinet door under the kitchen sink still comes off the hinges when you pull it open. It's done that for over 40 years, since I was a 12 year old running through the kitchen and ripped it off it's hinges because I wasn't watching where I was going.

And there, in the dining room, is that rickety old dining room table, where so many thanksgiving dinners had been served in years past

Is selling a house personal? You betcha it is.

I urge my colleagues to remember their own family histories when they visit their clients. Yes, one must be rational, one must offer the home at a price that will allow the seller to reach what could be a very difficult conclusion. Just do it with tact, love, and sensitivity. It may be a business to you but that house is somebody's living, breathing home. All those little defects don't add any value to my Mom's house but they make that it priceless in her (and my) eyes.

Please, remember where you came from.

Peace.

As of this November 22, 2009

What do these statistics mean?

• Inventory Units = Total homes for sale in Chester County, PA
• Average Sold/Month = Average number of homes sold over a 12 month period in Chester County, PA per month in the corresponding price range
• Months of Inventory = Inventory Units divided by Average Sold/Month

When Months of Inventory is greater than 6, it’s a buyer’s market.

When Months of Inventory is between 3 and 6, it is a neutral market.

When Months of Inventory is less than 3, it’s a seller’s market.

To all my friends in Chester County, PA, please circle May 1, 2010 on your calendars and then read on. I have a story to tell.

We built a brand new home here in North Coventry in April 2004. Like many of you, we watched with great concern and unhappiness as the value of our home plunged through the bursting of the housing bubble.

To make matters worse, unexpected changes in employment status left us very few options to relocate without losing a boatload of money. Furthermore, we really like here in Chester County and we really didn’t want to move.

We had to find a way to tighten our belts and reduce our expenses. When we moved into the house, we filed for an appeal of our tax assessment and we were able to reduce the assessment by quite a bit.

Property tax assessments in Pennsylvania are calculated by a formula called the Common Level Ratio (CLR) which is applied to the fair market value of the property. The CLR is recalculated annually and by 2008 it had reduced been significantly from our first appeal. The reduced CLR combined with the decreasing fair market value of our home led me to believe that we might be able to reduce our property tax assessment even further.

We filed the appeal, hired an appraiser to determine the fair market value of our home and appeared at our assessment hearing. The hearing went very quickly and smoothly and a few weeks later we were notified that the assessment had been reduced.

Now, for the good news!

We, like many people, escrow our tax payments with our mortgage company. While the assessment was reduced, the new tax bills weren’t processes by our lender until January and July 2009. This week the lender recalculated our escrow requirements. Since our tax liability had been reduced, they sent us an escrow refund of $4750! Furthermore, the escrow portion of our monthly mortgage payment reduced by $350/month!

So, what’s the significance of May 1?

That is the start of the period in which the County Board of Tax Assessment Appeals accepts appeal applications. The last day of appeals is August 1. You can find more detailed information about the tax appeal process at The Official Chester County Website

I will remind you all when we get closer to the May 1 date so keep checking back here for more information.

Peace.

Photo Credit

Much has been reported in the last few weeks about the strong numbers in the national real estate market. The news has been encouraging indeed. Since real estate markets are local, I thought it would be interesting and important to know how our market in Chester County PA is doing compared to the rest of the nation.

So, is there a real estate market recovery underway in Chester County, Pennsylvania?

Well, maybe... Here's why:

The National Association of Realtors reported a sales surge of 11% from May to June 2009.

It was reported nationally last week that home sales surged approximately 11% from May to June of 2009. According to TReND MLS data, the number of single family home sales settled Chester County rose from 323 units to 489 units from May to June 2009. This is a whopping increase of 51.4%. The average sold unit increase from May to June yearly in Chester County since 2000 has been approximately 37%. This statistic indicates that more home sales settled in the May-June timeframe than the national average by almost 40%. Current local home sales settled surpassed our local average by almost 20%. Year-over-Year sales in 2009 fell more than 10% from 2008. Nevertheless, a 51.4% sales surge from May to June 2009 is a very good thing!

Pending Sales Rise for 5 Consecutive Months

The National Association of Realtors reported earlier this week that pending sales have risen on the national level for 5 consecutive months. They reported that we have not experienced a 5 month consecutive increase in pending sales since July 2003. According to TReND MLS data, Chester County typically and consistently experiences 3 or 4 consecutive months of pending sales growth each year since 2000. January through June 2009 is the first time we've seen 5 consecutive months of local pending sales growth since 2000. Even more importantly, pending sales growth climbed to within .6% if prior year in May and jumped to an astronomical increase of 16.8% over prior year in June 2009. This is the first time pending sales has outperformed prior year pending sales since July 2007 and only the second time since December 2006. Furthermore, June 09 outperformance was huge compared to 1.0% and 3.8% in 7/07 and 12/06 respectively. If this trend continues, it is a very good thing!

Total Inventory

According to TReND Mls Data, June 2009 inventory of single family homes is at 3909 units. It has risen pretty steadily since January 2009. Current inventory levels have decreased 2.0% from June 2008. However, closed sales have underperformed 2009 by 10%. This has resulted in a slowing of inventory velocity and an inventory backlog of more than 11 months. This is not a very good thing!

Median/Average Sales Price

Due to the abundance of inventory in Chester County, home prices have fallen substantially. The median price of homes sold and settled in June 2009 was $317,000, a 9.2% decrease from June 2008. Average home prices sold and settled in June 2009 was $358,000, a 13.3% decrease from June 2008. The numbers indicate that more modestly priced homes are selling at a higher rate than higher priced home. Average sales price has been on a steady decline since November 2007. Median price have been on the decline since August 2008. This is not a very good thing!

So, I think the most significant statistic to watch for the rest of 2009 will be Pending Home Sales. Pending Home Sales is the leading indicator for closed sales which are crucial to all ot the issues that stand in the way of a bullish real estate recovery. As homes sell, inventory decreases, prices recover, homeowners begin breathing again.

The Chester County real estate market typically begins to cool after June and begins to warm up again in January. If pending sales cool at a slower pace than usual, we can be pretty sure that a real estate recovery in Chester County has begun. Check back in here again in October, We'll have another look at this when 3rd quarter results are available.