For this January Market Update we are watching and hoping that more people put more listings on the market.

Heck, we could see twice as many listings out in the January market as there are now and I doubt prices would drop. They might flatten, but at sellers would still have a huge advantage.

Before I share the numbers lemme just kvetch for a moment.

Our buyers are fighting right now, not only against the short supply, but also with terrible flips. In once case, our client made a full priced offer on a home that looked good when he made the offer. The inspection resulted in a sizable, but not unthinkable list of things that the seller could repair. The owner/agent could have done it for less than $5,000 on a $350,000 sale.

The owner/agent responded with a paltry list of items he would repair because he knows somebody else will come along and may not even ask for repairs.

We had to advise our client to back out, since we saw that the agent’s approach was a red flag. He did not even get a permit for a very small thing, and the only thing that he needed to get a permit for, a water heater replacement. If he was like this on what we found, what else could be out there?

The moral of the story is to be aware of flippers right now. Be cautious and inspect everything. In the case of this one, it was particularly sad to see an agent who flipped this property and was willing to skip important details like that. We only hope that he disclosed all of the problems that our client’s inspector discovered and reported to the him. If not, he could be in deep, deep trouble –both as a seller and as an agent.

And be particularly cautious of those ibuyer companies that promise you a discount commission. Watch my short video here on how that system is manipulated to make them lots of money while delivering a terrible product to the next buyer.

Any-who, back to the January Market Update. Our friends at the Cromford Report are predicting continued tight supply and high prices through 2021.

Some highlights:

• Active Listings: 6,055 versus 12,141 last year – down 50.1% – and down 18.0% from 7,388 last month
• Monthly Sales: 9,989 versus 7,788 last year – up 28.3% – and up 8.9% from 9,175 last month
• Monthly Average Sales Price per Sq. Ft.: $211.62 versus $179.97 last year – up 17.6% – and up 1.8% from $207.84 last month
• Monthly Median Sales Price: $332,000 versus $289,500 last year – up 14.7% – and up 0.6% from $330,000 last month

It is interesting, isn’t it, that the number of monthly sales is similar to last year, but the number of listings is cut in half. That tells us that somebody is buying homes every month, but that so many more are not.

To continue from Cromford:

“Buyers cannot be blamed if they in despair about the lack of supply. We have less than half the number of active listings without a contract that we had a year ago. This time last year we described the lack of supply as shocking, so what do we call the current situation? We actually saw more new listings arrive during 2020 than we did during 2019, but only 1.4% more. The annual sales rate increased by 6% so the extra supply proved thoroughly inadequate in the face of the demand.

Prices have accelerated due to the huge imbalance between supply and demand, but as yet we have only seen part of that reaction. Sales prices are a trailing indicator and lag behind the leading indicators by up to 15 months. We can therefore expect to see prices move even higher during the next 12 to 15 months with appreciation rates possibly rising over 20%.

Those who think the increases in mortgage delinquency are going to to halt these rise are wishful thinking. The level of delinquency is nothing like as bad as it was during the 2006 to 2008 crisis and the level of delinquency has improved for the last 6 consecutive months. Any extra supply coming onto the market, due to home owner financial distress, is likely to be snatched up quickly by desperate buyers. Few of the homes with delinquent loans are likely to make it to foreclosure. They can be quickly sold prior to foreclosure to pay off any loans and the record levels of home equity will leave the vast majority of sellers in the black even if they can no longer afford their mortgage payment. It is the strong home equity levels that will motivate distressed buyers to sell up rather than walk away. In 2007 prices started to crumble due to huge excess supply, meaning many homes went underwater quickly and homeowners could see no advantage from avoiding foreclosure. The current situation is opposite, not similar.

January is usually the strongest month of the year for new listings… Therefore if we are going to see any relief for buyers, it should arrive during the next 4 weeks. If it does not, then the peak selling season of February through May is likely to be limited by what little is available. This may put a cap on any growth in unit sales, but it will not put much restraint on dollar volume as prices rise to compensate.

If you are getting ready to navigate the real estate market, give us a call a 602-456-9388 and we will help.