Update on our Real Estate Market
First Quarter of 2013
There are a lot of things I love about being in the housing business. Not the least of which is the satisfaction from helping someone find the next place they call “home.” Home is that special place where, as it is said, when you go there, they have to take you in. But as I “do life” around my community, whether it is attending a Rotary Club meeting, shopping at Festival Foods, meeting friends for dinner at Backyard Grill, going to church, or dragging myself to the YMCA a few mornings a week, I get asked a lot of questions about what’s going on in the market. This column addresses some of the questions I hear the most these days. 1. “So when is the housing market going to get better?” I am actually amazed when I hear this question because there has been so much overwhelming evidence that we have entered a new phase in home sales. So far in 2013, we have had 20 months in a row where the home sales of the month far exceeded the same month of the previous year. In 2012, home sales were up 28% in our four County area over 2011, and 2013 is shaping up to do as well. Predictions are that the pent up demand of buyers who have been sitting on the sidelines are returning to the market in a big way.
2. “Aren’t their too many homes on the market right now?” The biggest change we have seen in the housing market lately is that there are not enough homes on the market. The sales are increasing rapidly, but homeowners are not putting their homes on the market at anywhere near the same rate. We have less than 9 months of inventory in our County right now and that means buyers have less to choose from and the homes longest on the market are selling because there is nothing else from which to choose. I cannot emphasize this enough: the market needs more homes for sale!
3. Shouldn’t I wait until prices go back up to list my home? That depends on how long you are able to wait. Home prices sank as much as 30% during the Great Recession. And while sales have improved markedly, prices are only now edging up in our market. According to a recent CNN article, Fiserv is predicting we don’t get back to 2006 prices until 2023. This is the “new normal.” Is putting off where you want to live next worth waiting that long?
4. But if I sell now, doesn’t that mean I’ll never make up that loss? As long as you are buying another home of equal or greater value, you actually more than make up that loss. For example, if you take a 10% loss on selling your home for $125,000, you “lost” $12,500. But if you buy a home for $175,000 that also took a 10% loss, you gained $17,500 in equity. You’re up $5,000. And the truth of this market is that the homes in the higher price ranges have averaged a greater drop than those in the lower price ranges…so your gain is even greater as the market improves.
5. If I put it on the market, do I really have to “stage” it, and price it to comparable homes? A buyer’s market is best described as a “beauty contest” and a “price war” rolled into one. When they come to see your home, they come there to try to eliminate it. If your home doesn’t look the best compared to the rest, or isn’t priced in line with similar homes, they cross it off their list until only one remains. That is the one they put an offer on. We can prove a staged/right priced home sells quicker and for more money than those that are not…every time.