I’On Market Update – January 17, 2011

While the I’On real estate market continued to be challenged in 2010, there was some improvement during the year.  In this post, I will put some perspective on the 2010 market and give you my thoughts on what 2011 may bring for I’On home sales.

I’On Real Estate Market – 2010 Recap

There was a 34% increase in the number of I’On homes sold in 2010!  A total of 51 homes sold in I’On last year compared to only 38 in 2009. This increase in activity also contributed to a steady reduction of available inventory throughout the 2nd half of the year.  After hitting a high of 76 I’On homes for sale in May, the number of I’On homes for sale has been steadily decreasing and we now have only 49 homes for sale in I’On.

Price Pressure Continued in 2010 for I’On Home Sellers

In spite of the increased sales activity, there was more price pressure on sellers last year as buyers continued to have many choices in I’On and other Mt. Pleasant  neighborhoods.  Overall, the average selling price/square foot was down 5.7% in 2010 to $250. However, this is an improvement over 2009 when prices fell 10.5%.

Let’s break the numbers down a little further in order to gain some perspective.  To do this, I am going to analyze 3 specific price ranges in the I’On real estate market:

  • Homes sold below $750K
  • Homes sold between $750K and $1M
  • Homes sold above $1M

Preferred Price Range of I’On Home Buyers Has Shifted

The chart below shows the number of I’On homes sold in the last 6 years, broken down by the above price ranges.  What is interesting is that the 34% increase in sales activity last year is directly attributed to a huge spike in home sales below $750,000.  In fact, I’On home sales below $750K surged 93% last year (from 15 to 29 homes sold) and represented 57% of overall I’On homes sales.  Most of this increase was due to a spike in homes sold below $500,000.  In contrast, when the market was peaking in 2006, this price segment represented only 17% of I’On home sales!!

The surge in I’On home sales below $750K has had an impact in two other areas – selling prices and months of available inventory.  Due to the increased activity in this price segment, prices actually increased 3.2% over 2009 to $260/square foot.  No, that is not a typo.  I did say INCREASE!!  This is the first price increase we have seen in any I’On market segment in years and hopefully this represents a bit of stability returning to the market.  In contrast, pricing for homes above $1M fell 7.1% to an average of $260/square foot while homes between $750K and $1M fell 19.6% to an average of $217/square foot.  The chart below shows the trend in each segment for the last 6 years.

Sales of Bank-Owned I’On Homes Impacting Pricing

For homes that sold between $750K and $1M, it is important to note that the dramatic reduction in pricing was due in large part to the inclusion of 3 bank-owned properties.  These homes normally sell at a steep discount to the market and that was no exception here.  Without these 3 homes included, the selling price per square foot in this segment would have been $229, still a reduction of 15%.  In addition, there were several other homes in this segment that sold at a fairly significant discount to the market.  We are likely to see more of the “bank-owned” affect in 2011 in every price range.  It is simply a reality of the market right now.

I’On Home Inventory – Some Good News!

Currently, there are  49 I’On homes for sale.  This is down 36% from the 2010 peak in May when there were 76 homes for sale in I’On. Overall, there are 12 months of available inventory in I’On. As with home sales, we get more perspective by breaking the available inventory down by price range.  This is based on the rate of sales for the last 12 months….

  • Less than $750,000 – 8 months of available inventory
  • $750,000 to $1M – 14 months of available inventory
  • Over $1M – 18 months of available inventory

I expect that inventory will rise as we move into the spring selling season and more I’On homeowners put their properties on the market. However, the overall trend is down.  At the peak of this buyer’s market, there were approximately 100 homes for sale in I’On!!

What’s Ahead in 2011 for the I’On Real Estate Market?

There are many factors that will affect the I’On real estate market in 2011, including interest rates, jobs, economic growth, etc.  But in the end, it will be all about inventory levels.  As I have indicated in previous posts, a “balanced”  market is generally defined by about 6 months of available inventory.  As you saw above, I’On home sales below $750,000 were strong in 2010 resulting in lower inventory and some much needed price stability. Currently, there are only 8 months of available inventory in this price segment…..not the 6 months or below sellers are looking for, but very close!  I do expect continued stability in this segment of the market in 2011 but don’t look for any significant increase in pricing.

I do expect price pressure to continue in other segments of the I’On market in 2011, particularly for homes priced above $1M.  The reason for this is simple……too much inventory!!   Currently there are 18 months of inventory above $1M and 14 months of inventory between $750K and $1M.  While I certainly can’t predict the future, I do know that it is going to take some time to work through this inventory before we can expect to see prices stabilize.

If I can answer any questions about this I’On real estate post or if you are thinking of buying or selling an I’On home, please contact me.  My team offers a full range of services and we will be happy to assist you in any way we can.

2 thoughts on “I’On Market Update – January 17, 2011

  1. Interesting report. You worked the numbers to your benefit. While you do suggest challenges still for 2011….as a Investment Banker, I can without a doubt tell you there will be challenges into 2014. Not just 2011.

    It is going to get worse Chuck. Much worse.

  2. It may get worse, but I’On is positioned to do better than other places. When gas prices rise, the futility of attempting to live the car connected life on the exurban fringe is going to become more apparent. While someone wealthy enough to buy a million dollar house can probably afford five dollar a gallon gas, there is an irrational component to it. Even wealthy people don’t like paying $100 at the gas station.

    I doubt we’ll see a return to the glory days of easy real estate appreciation any time soon (perhaps ever) but I’On was conceived and designed to survive the inevitable contraction which was clearly ahead back in the 1990s. (Read Suburban Nation or The Geography of Nowhere. It is clear from these figures that If the community had been build with smaller, less expensive houses as originally conceived it would have survived more successfully that it has.

    Tell your investment banker friends the future is going to be sustainable, compact, walk-ably connected and efficient. Or it is going to be something else far less pleasant.

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