March is traditionally a month associated with “Luck.” People try to find four-leaf clovers, hang horseshoes with the heels up so that good luck won’t drain out, and celebrate St. Patrick’s Day with a good, old-fashioned green beer.
How did the real estate market fare in this “Lucky” month? Here are the numbers:
(Click on each infographic for a larger version)
- We continue to experience a steady rise in average sales price which is great for those homeowners who lost a lot of their equity in the recession. Short sales are no longer as prevalent as they were just a few short years ago. A short sale requires lenders to forgive some of the indebtedness of a mortgage if the proceeds from a sale don’t cover the remaining balance of the mortgage, but only after the homeowner can prove a hardship.
- The number of active listings last month plummeted 47% from last year at this time. This is a staggering number. As we will see when absorption rates are examined at the end of this post, low to moderately priced homes are in short supply. Homeowners that own homes less than $300K are choosing to sit tight and builders are not bringing new product to the market in this price range. I’m not sure this is going to get better anytime soon.
- Settled units remained surprisingly strong considering the scarcity of homes. To drop just fifteen percent from the previous year is not bad considering the shortage of inventory of homes.
- Interest rates on thirty-year, fixed-rate mortgages continue to inch up. Expect this trend to continue during the balance of the year and approach five percent before the year is up. On a $150,000 mortgage, this is a difference in monthly payments of fifty dollars per month when compared to today.
- Median days on market has dropped to the astounding figure of twenty-one. If sellers take the time to stage their properties and price them right, it’s not unusual to receive multiple offers in a short period of time.
- 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. The absorption rates on properties less than $300K are at historic lows. If you are a buyer in this price range, you better be prepared to make an offer when a property comes on the market by obtaining a strong pre-qualification letter from a lender, proffering a strong deposit, and limiting the contingencies that you insert into the agreement. On the other hand, if you are selling your $400,000+ property, price it realistically or you could risk waiting for an acceptable agreement for an extended period of time.
All the best!