Happy Spring! Since we are through the first quarter, now is a great time to take a look at the performance of the Wilmington, NC real estate market. At this point, the questions I get about the real estate market from people with whom I speak are: “is it turning around?” “Is it getting better?” Well, let’s tackle those head on! We’ll go through some big picture historical data, some more narrowly focused data and draw a few conclusions from that to paint a picture of where we are headed.

Historically across the country (and here in Wilmington as well), the average appreciation each year has been 4%. This has been true 30 or 40 years. I tested this on the Wilmington NC real estate market by creating the graph immediately below this paragraph. I could only get average sales price data as far back as 1996 (as represented by the blue line). The green line represents what 4% appreciation would have looked like, starting at the average price in 1996. Ever heard of the real estate bubble? Well, you can see it pretty clearly here where the blue line (average price) departs sharply from the green line (4% curve) starting in about 2004.

I’m sure you’ve all heard the saying “what comes up must go down.” Well, as you can see in 2007, the average sales price started to come down, and come down hard. At the end of 2009, we actually got back to the average price that we should have been at based on 4% appreciation (or about $232,000). Unfortunately, the law of averages says that the size of the bubble below the line is going to have to be about the same as the size above the line. The short answer here is that, in the BEST CASE, prices will stay the same for the foreseeable future.

So what about the first quarter? Well, here are the cold hard numbers compared to last year:

As you can see, the average sales price continues to drop in Wilmington real estate market. There is also good news in these numbers! From 2007-2009, all of the key numbers were plummeting. The fact that the two of them appear to be increasing is great news because it indicates that the market is beginning to recover.

What does all this mean? For sellers, this means that the best price that they can get is the price that they can get today. For buyers, it means that they should plan to hold their home for more than 7 years. Truthfully, purchasing real estate with plans to hold it for less than 7 years is considered speculation by professionals. All in all the market has stabilized a bit. In this Realtors opinion, the average home price in Wilmington, NC will probably stay under $225,000 this year. Please stay tuned for more posts about how to best deal with this market as a buyer and as a seller. I would love to hear your comments!

This entry was posted on Tuesday, April 19th, 2011 at 10:45 am and is filed under Market Reports, News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.