INTRO: The New Normal? We finally have a solid reason why the inventory has been and is continuing to be extremely, abnormally low. Continue to read. Not much is likely to change and with a presidential election on the horizon, it’s anyone’s guess where things are going. Let’s look at the details.
DEMAND: The number of homes sold per month continues to be steady, year over year. One interesting observation is that with the exception of March and October, the number of homes have peaked last year when looking at the last 4 years of closed transactions. This could be an indication that we’ve crested the peak of demand in the current market, yet it’s any ones guess. Whether it’s the political climate or some other factor, we are in uncharted territory when it comes to market cycles.
SUPPLY AND INVENTORY ACCUMULATION: Supply continues to be at all time lows. However, this month we believe we found an answer. We were in a class being taught by Gene Rivers out of the Florida region, a Realtor with Keller Williams.
He laid out that this draught of inventory is 100% related to what happened to the New Construction industry in the 2008 correction. In 2006-2007 there were about 2 million new homes sold. In 2009 it was less than 300,000. It was devastating to the New Homes industry and it hasn’t yet recovered.
This is one reason why we see an abundance of high end apartments being built all over the place. It’s to fill the housing shortage vacuum. It’s not likely that inventory will come up any time soon.
SOLD TO LIST RATIO: Due to the lack of inventory, this continues in the 99% range. Again, due to the inventory shortage, this isn’t likely to change any time soon.
RATES: Rates have increased over where they were about 2-3 months ago. They are just under 4% which is up about .25% over the low around labor day. This isn’t significant enough to effect buyers decisions, yet.
CONCLUSION: Welcome to the new normal. Until a legitamate recession hits, not much is likely to change. Of course all of this is subject to your hyper local market. There are markets in Chester County that continue to move extremely quickly while others, just a few miles down the road have slowed down to a more “normal” pace. Normal meeting that it takes 45+ days to sell the home. And in upper price ranges it’s taking 90-120 days or more to sell.
What’s this mean for Sellers – This market for sellers is bonkers. In most area’s of the county, Homes are still selling in minutes and hours, not days, when the homes are priced right for their condition. This is not ALL areas but most. That means that pricing is more important than ever. If it’s priced incorrectly, you could leave thousands on the table. If it’s over priced, it will also cause you to lose thousands. Nailing that perfect price is crucial. An expert agent can help you do that.
The negative for sellers is if they are buying a home as well, it’s going to be very difficult to find a great fit if your home sells very quickly. It severely limits their choices. What we’ve seen work well is either moving twice, meaning they move into a temporary situation or they rent the home from the new owners for short amount of time. That is not always possible though.
Next, what does this market mean for Buyers – Money is CHEAP! This allows buyers to buy a lot more house than they could have even 9 months ago. The “con’s” are that there is very little to choose from and when great options become available, they’ve got to be ready to make an extremely strong offer, many times at or over asking price and compete agains 5-10+ offers. We are seeing that the average buyer is making roughly 3 offers before they get one accepted.
Overall, homes are at their highest values in history and yet money is at it’s cheapest to borrow. And in the end, regardless of the pro’s and con’s, it’s a great time to buy or sell real estate. If you are looking for very strong and professional representation, please give us a call! Our heart is to dramatically impact lives through real estate and we’d love to become your Realtor for life.