What's Happening in the Market?
It’s that time of year! The sun is shining more and the lawns are finally green again. Kids are getting antsy in anticipation of the school year coming to an end and real estate agents are gearing up for another hot summer with many predicting the market will continue to be as hot as the upcoming summer days.
In March, Realtor.com showed that homes were selling on average a week faster than last year, averaging only 63 days on the market in 36% of the largest housing markets in the country. This national trend is predicted to continue into this summer’s real estate season.
Our local market mirrors the national trend. There continues to be a very strong demand and extremely low supply which can make this a tricky market to maneuver for buyers. In this seller’s market, there were almost 1,000 pending sales in April, a 10% increase over April 2017. New construction activity has also increased dramatically during the last year, with closed units up by 25% and closed volume increasing by 21%.
These market conditions don’t just reflect the activity of the average home buyer, they reach across all demographics with higher end homes now feeling the effects as well. Luxury Collection homes priced over $600,000, closed units are up by 21% and closed volume has improved by 16%, but the average sales price has declined by 4% during the last 12 months. In April, the sales to list price ratio for closed sales with no price changes was 98.2% and these homes were only on the market for a record 24 days.
The current market makes the process of buying a home a little more challenging for buyers, almost requiring them to duke it out with other prospective buyers as they vie for the limited homes available. While the total number of active listings currently on the market in our area remains near historic lows, down 32% from two years ago. Conversely, demand continues to be at historically high levels. As a result of this trend the average sales price in April was $206, 016, a two year high, and the average time on the market for all pending sales in April was 44 days, a two year low.
While it’s easy to see that this market is perfect for sellers, what does all of this mean for potential buyers? While it’s not an optimal market for buyers, this market is still survivable if buyers are smart. There’s no way around it, this market requires that buyers do their homework. With an increase in competition for property, buyers will need to take the time to do some preliminary work and get their finances in order. This means getting pre-approved for your mortgage loan and saving up a down payment BEFORE you begin the hunt for your next home. This simple strategy alone may put you ahead of competitors who are interested in the same home you’ve got your eye on, but who aren’t as prepared as you are and if nothing else it will at least show sellers that you are serious. For tips on being a buyer in a seller’s market, see Curbing a Buyer Expectations in a Seller’s Market.
Preparation is vital and will give you a leg up on the competition, but one of the best tools a potential buyer can have in their arsenal is a professional real estate agent. An experienced agent can be a game changer in maneuvering through this competitive market. A good agent will be able to negotiate effectively for you and can help to make the whole process a lot less daunting by saving you both time and money. Agents aren’t intimidated by this market’s highs and lows and can provide professional perspective that can help buyers to make the best and most informed decisions.
So whether you are in the market for your dream home or if you’re getting ready to sell your home, get ready for a wild ride. The forecast predicts it’s gonna be a hot one!
Written by guest blogger Tish Welcher.