August Market Update

Our friends Michael Orr and Tina Tamboer at the Cromford Report continue to give us great data and perspective on where the market is these days. 

Interesting trend: there are about 50% more homes listed this year than last, but about 23% fewer homes under contract. See the nifty images below and this Cromford summary:

• Active Listings (excluding UCB): 24,440 versus 15,692 last year – up 55.7% – but down 4.4% from 25,555 last month
• Active Listings (including UCB): 27,695 versus 19,463 last year – up 42.3% – but down 4.3% compared with 28,950 last month
• Pending Listings: 6,426 versus 8,892 last year – down 27.7% – and down 7.7% from 6,965 last month
• Under Contract Listings (including Pending & UCB): 9,664 versus 12,663 last year – down 23.5% – and down 6.6% from 10,360 last month
• Monthly Sales: 7,254 versus 7,924 last year – down 8.5% – and down 4.0% from 7,558 last month
• Monthly Average Sales Price per Sq. Ft.: $129.46 versus $120.13 last year – up 7.9% – and up 1.5% from $127.51 last month
• Monthly Median Sales Price: $197,000 versus $182,500 last year – up 7.9% – and up 2.5% from $192,250 last month

Further, they expect prices to sit at about the same range for a while:

“We continue to expect the price range between $125 and $135 per sq. ft. to be a natural resting point after the rapid rise from $78 that has occurred since September 2011. It will take a big change in market conditions for prices to move significantly out of this range.”

So, what does this mean? Michael and Tina would have finer analysis than I would, but based on what I’m seeing in the field, I think there are a lot of sellers who are listing higher than the market will bear, while the buyers are not coming out (see last month’s analysis to see the painful public policy reason why).

So, what does this mean for you?

If you are a seller, DON’T do these two things:

1) “We will list 10% higher than our agent suggests so that we have some ‘wiggle room’ to negotiate.” This is not a good strategy. First, if you list at the right market price and you don’t like an offer, don’t take it. Second, if you list too high people won’t even consider looking at the property, let alone making an offer. You will sit on the market for too long and your house will become “stale.” Then you will get mad at your agent for not marketing your home properly. While it could be possible that your agent did not market your home property. But, more likely you are losing possible buyers.” If you don’t trust your agent’s price analysis, spring for a $300 appraisal. You will probably save yourself a lot of heartache.

2) “We don’t have to renovate anything. The buyers will want a new kitchen, anyway.” The buyers might  do this, if you are listed below market price. But, more likely they won’t look at the house at all. Unlike 2009-2011, buyers are expecting houses to show well. Of course, there are folks who want fixer-uppers. We are even listing a good opportunity. But, the percentage of the buying market who wants that has decreased substantially.

If you are a buyer, you have more negotiating power. There are a lot of folks who are pricing as if it is 2013, when the market climbed dramatically in the first half of the year. We just are not seeing that right now. We are not declining, but we are not popping upward, either.

If you need more information about the market, or your particular situation, please contact me at 602-456-9388.