Current Market Overview
Understanding three views of the current market allows Buyers to maximize their ability to evaluate properties, receiving the highest value in their home search and Sellers to position their property to maximize money in their pocket while minimizing time on market:
- YTD March Sales: -8.4% lower than in 2012
- Monthly sales decreased in each month this year compared to the same period last year
- Distressed sales were lower at 36.9% of 1Q 2013 sales , but were 68.3% of sales in the <$100K price range
- Sales Prices: Median higher by +42.1% in 1Q 2013 compared to 1Q 2012
- Percent S/L price: Median 94.0%, +6.2 percentage points higher compared to 1Q 2012
- Days on Market: 77 Days, down by -26.0% in 1Q 2013 compared to 1Q 2012
- Price Reductions: Lower – at 44.8% of 1Q 2013 transactions, -16.4 percentage points lower than in 1Q 2012
- A large drop in % S/L ratio occurred when a price reduction was taken (-13.6 percentage points in 1Q 2013)
- <$100K price range impact of price reductions on S/L ratio was greater (-28.0 percentage points) than for other price ranges
- DOM effect – +5.1 months longer (+7.5 times) needed to sell after a price reduction in 1Q 2013
- Failed Listings: 30.0% of listings in 1Q 2013, down by -11.8 percentage points from 1Q 2012
- Overpriced Listings: 61% of listings overpriced in 1Q 2013
- Supply: Decreased by -31% from March, 2012 to 3.7 months of supply in March, 2012
- Non-distressed Properties priced below $500K are in a “Seller’s Market” condition
- Distressed properties in all price ranges are at or below 5.7 months of inventory, 1.1 months for <$100K Distressed
IMPORTANCE TO NON-DISTRESSED SELLERS:
- Potential sellers who have been reluctant to list due to the slow market may now try to take advantage of the current supply/demand shift to list their property while they have an advantage.
- The downward pressure from Distressed properties on selling prices for all properties has been somewhat offset by lower inventory, so this could be a better time to sell than in recent periods.
- The reduced inventory of distressed properties has increased buyer competition for those properties making it even more important for sellers to consider their effect in properly pricing non-distressed properties.
- Despite the temptation for sellers to price higher in light of an improving market, setting realistic initial listing prices that are in line with buyer expectations (“in the market”) can result in sales at or above the original listing price in very few days on market
IMPORTANCE TO BUYERS:
- The supply/demand relationship has, at least temporarily, shifted to the seller’s advantage. If that continues, fast action and realistic offers will be necessary for buyers to capitalize on still-low prices for available properties.
- For buyers who are interested only in distressed properties, the supply has dropped to a point where competition among buyers for that supply has jumped, making realistic offers is a must for desirable houses
- Quick action and serious offers are required when high-value properties are found (47.2 % of 4Q sales), since low median DOM and high S/L ratios usually result, often with multiple offer situations.
- The good news is that prices are still historically low and interest rates are too, so the if the right property is found, this is a very good time to be in the market
SUCCESS STRATEGIES FOR SELLERS:
- Do not ignore the impact of distressed properties competing for buyers in seller’s price range and location, when setting initial listing price, since they still affect comps
- Maximize selling price and minimize market time by choosing an initial listing price that represents a high value compared to competing listings
- Re-evaluate market trends continuously to re-assess pricing choice – avoid chasing the market or missing any turns that may develop
CONSEQUENCES OF WRONG SELLER CHOICES
- Sell only after a much longer time on market – Median DOM at least +7.5 times longer in 1Q 2013.
- Sell at a much lower portion of original listing price – median of at least -11.8 percentage points lower.
- Failure to sell – 30% of listings failed to sell in 1Q 2013.
- Multiple listing periods – 22.3% of sellers required multiple listing periods, selling at a median of -17.3 percentage points lower after a median of +13.9 times longer (+9.0 months).
RISKS FOR BUYERS
- Low-ball offers on high-value properties will likely result in missing out on a great opportunity.
- Making offers too high on properties listed multiple times could result in paying too much.
- Low inventory condition reduces buyer’s advantage in contract negotiations.
If you would like more specific information about your area/neighborhood, please let me know and I am happy to provide it for you. You can also visit my website www.TheThorneGrp.com. My website offers up to date information for you and you can also search the Multiple Listing Service like an agent.
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