The Sussex County housing market surged in the fourth quarter, with a dramatic spike in sales that continued a yearlong trend of markedly higher transaction rates. Nevertheless, we are still not seeing these sustained levels of buyer demand have their expected impact on pricing.
Sales. Sussex sales were up sharply in the fourth quarter, rising almost 39% from last year and finishing the year up almost 18%. Indeed, Essex closings have now gone up in each of the last four years, during which sales have now increased by almost 80% from their 2011 levels at the bottom of the market. With sustained levels of buyer demand, the market is in much stronger shape than it has been at any time since the 2008-09 market correction.
Prices. This spike in sales, though, has not yet had an impact on pricing, which has actually deteriorated, even while buyer demand increased. Average and median sales prices were down for both the fourth quarter and the full calendar year, which was a little disappointing given the transactional strength in the market. Moreover, prices have been trending downward now for several years, in defiance of what we would expect from normal economic behavior. Generally, it takes time for increases in demand to drive pricing changes, so we believe this will turn around if buyer demand remains at its current levels.
Negotiability. The negotiability indicators – the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price – were mixed. The days-on-market fell dramatically in the quarter, dropping over 13% — and almost a full month! For the year, the market time was down as well, although not as significantly. But we didn’t see the same dynamic in the listing retention rate, which actually fell a bit for the quarter and was flat for the year. Generally, we expect that as buyer demand heats up, homes will sell more quickly and for closer to the asking price. We’re starting to see quicker sales, but nothing that would indicate that sellers are gaining leverage in their negotiations with buyers.
Going forward, we do expect better things for the Sussex market. We believe that buyer demand will stay strong through 2016, especially with a relatively strong economy, homes priced at attractive levels, and near-historically low interest rates. And if buyer demand stays at its current levels, we expect that Sussex will start to see some meaningful price appreciation by the end of the year.