And you thought Old Man Winter had taken a vacation. I think it was just a coffee break before he decided to really get to work. Oh well, on to the numbers.
(Click on any of the charts to enlarge and/or download)
A steady rise in average sales price bodes well for the real estate industry. This past month, the benchmark inched closer to the $200,000 mark and was up 4% over last year at this time. Homeowners across the board are finding that the equity in their homes that had been lost during the Great Recession, is making a steady comeback. In fact, according to Core Logic, just over 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8% of all mortgaged properties, or approximately 48 million homes. As the economy strengthens, this will only get better.
The lack of available inventory continues to be the biggest area of concern in our geographic area. There are 17% fewer homes on the market this year as compared to a year ago. If you’re in the market for a home, it is important that you get pre-qualified by a reputable lender, be ready to make an aggressive offer on well-priced homes, and have a solid deposit accompanying your agreement in order to stand out from potential competing offers.
The number of homes sold remained unchanged from a year ago which shows that the lack of inventory, as previously mentioned, has not deterred buyers from making decisions. In addition, the average period of time that homes remain on the market has dipped to under two months. If you’re a seller and your home has eclipsed the 60 day mark without an offer, you either need to get more aggressive with your pricing and/or make your property more attractive by staging it or making necessary cosmetic enhancements.
Interest rates for 30 year, fixed-rate mortgages continue to climb and will probably do so over the next 6-12 months. Both buyers and sellers need to be cognizant of this trend. For buyers, your buying power over this period of time will shrink. If you’re pursuing a $200,000 mortgage in today’s market, keep in mind that with every half percent increase in interest rates, you’ll be shelling out approximately $50/month more for a house payment. And sellers, you must realize that as interest rates climb, the buyer pool for your property will shrink.
Absorption rates are the rates at which available homes are sold in a specific real estate market and price range during a given time period. It is calculated by dividing the total number of available homes by the average number of sales per month. The rate represents the number of months it would take to clear out available inventory if no other homes come on the market.
At the present time, homes that are valued below $200,000 are selling rather quickly and we’re in a seller’s market with prices on the rise. If you have a home valued between $200,000 and $400,000, you’re in a balanced marketplace where the number of available homes is currently meeting the demand of buyers. However, if you have a home valued above $400,000, you are facing an overabundance of inventory where buyers have a wide selection of homes to choose from. Sellers in this price range need to stand out from their competition by making sure their home is staged properly and priced aggressively.
Until next month – – – all the best!