Inventory is increasing in our market, and price appreciation is slowing down. This means we’re shifting toward more of a buyer’s market.
What can our rate of home sales tell us about our current market?
For every single month of 2018, the buyer traffic has been greater than the same month from 2017. Realtors continue to report that demand is there—current renters want to become homeowners, but there aren’t enough properties available. Overall, we’ve had more home sales than we had last year.
Why do renters want to become homeowners? Once they buy a house and have a fixed-rate mortgage, they can lock in their housing costs for the next 30 years. As you can see in the slide at 0:57 in the video above, nationally it’s 26.3% cheaper to own a house than to rent a house.
The good news is that our supply of inventory is increasing. After years of record-breaking inventory decline, September saw almost flat inventory signals, which indicates a big change in our market. According to Realtor.com, the number of new listings on the market jumped 8% year over year this past September—the largest increase since 2013. More new homes are also being built, as the number of new construction sales rose 12.7% year over year during last month.
As more inventory enters the market, buyers have more options. The signs are pointing to a market that’s shifting toward buyers, but in most areas, we’re still a long way from a full reversal from a seller’s market to a buyer’s market. Prices aren’t dropping, but the rate of appreciation is decelerating. Prices are a reflection of supply and demand, so as supply increases relative to demand, prices will naturally slow down.
The last couple of weeks, I’ve seen a complete halt of sales for properties with bathrooms and kitchens that haven’t been updated in over 25 years. Buyers nowadays want everything done for them right as they walk into a property, so the slowdown in price appreciation isn’t just because there are more buyers on the market, but also because buyers are pickier than ever.
At 2:37 in the video, you can see that Zelman & Associates projects price appreciation to drop from 5.5% this year to 4.5% next year, and from 4.5% to 4.1% in 2020. If you’re a seller, you shouldn’t let this concern you, because concern can lead to paralysis. Buyers are still out there, so if you have a home that’s properly priced, it’s likely going to sell. It’s important, though, that you start preparing your home for the market earlier than you think you need to; certain factors can negatively impact your home’s value. These factors include:
- Your home being located on a busy street or a corner lot
- Dark paneling, trim, or wallpaper
- Not having central air conditioning
If you’d like a full list of things that can negatively impact your home sale, get in touch with me and I’d be glad to provide you with one. Some factors, such as location, you can’t change, but others you can. This is why it’s important to have a professional by your side—so they can advise you on which changes will be the most cost-effective and provide you with the highest return on your investment.
If you want to learn everything you need to know about keeping equity in your pocket when selling your home, come to my next Home Selling Sharks Seminar on January 26, 2019. We’ll go over the eight strategies that will keep money in your pocket by fighting the “home selling sharks.” To find out all the details, check out www.homesharkseminar.com.
As always, if you have any more questions about our market or you’re thinking of buying or selling a home, don’t hesitate to call or email me anytime. I’d love to help you.