As we wave goodbye to the 3/4 mark in 2017, the beautiful fall foliage is rapidly appearing all around us. There have been lots of interesting developments on the real estate front this past year. The market that has shown a steady recovery from the Great Recession which has been good for Central Pennsylvania. Let’s take a look at the numbers to see what they reveal.
(Click on any of the images for a larger view or to download)
The average sales price year over year shows prices are up 4% to just over $206K. This relatively modest appreciation rate is good news for sellers who are slowly recovering the lost equity from the economic downturn. This number should also send a message to potential buyers who are on the fence about purchasing. Waiting to buy equals higher prices and interest rates that are potentially on the rise (more on this later).
The lack of salable inventory continues to be a problem spot; down 13% from last year. Couple this with the average days on market of about 33 days and you end up in a market where buyers find themselves in multiple offer situations. In many cases, homes are going under agreement for more than list price. If you’re a seller who has not received an offer on your home in 30-60 days, it’s time to drop your price. In this fast-paced market, if you continue to market your home at an unrealistic price, you will ultimately receive less for your home. When buyers see the number of ‘days on market’ that exceeds 60 days, they think something is either wrong with the property or they just won’t show up at your front door to view it.
Although financing interest rates have not spiked, they are increasing. Every month a buyer waits to buy results in lost dollars out of their pocket. Using the figures from the chart, if you waited to buy a home this year versus last year, your monthly payment on a 30 year, fixed-rate mortgage of $200,000 would have increased approximately $40.00 per month. Over the life of the loan, that equates to over $14,000. Ugh!
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 $300,000 are selling rather quickly and we’re in a seller’s market with prices on the rise. If you have a home worth $300,000-$400,000, you are in a balanced market where home prices are stable. If you happen to have a home valued over $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 or it will linger on the market.
Until next month – – – all the best!