Saturday, June 13, 2015
The spring rush is in full bloom with the market looking very much like last spring, only slightly less hectic. All indicators in May show a strong market as prices are up (7%), new contracts written are up (15%), the number of homes for sale is up slightly (2%) and new listings entering the market are up (4%). As sellers are noticing the strength of the market, they are responding by listing their homes. The market momentum does vary by lower, medium and upper priced categories and although they differ in strength, the lower priced markets are moving faster than upper-end markets. The trends with each price range are constant, regardless of geography (we use price segments of $0-250k, $250-500k and over $500k as a general representation of the overall metro area).
About 33% of all homes sales are selling for at or above list price, down from 39% last year. Homes that are selling in 10 days or less held steady compared to last year at 35%. This May, 59% of homes sold in 30 days or less. The upper-end market (over $500,000) as expected was a bit slower with 27% of homes selling at or above list and 22% selling in 10 days or less.
We are hearing from our sales team across all markets that the upper-end price range, particularly over $1,000,000 is slowing as the inventory rises faster than demand, with prices remaining flat. Year-to-date, there have been more sales in the $1,000,000 plus category (85 vs. 74 units in Southeast Michigan) but the pace has slowed the last 60 days.
For sellers, there is no better time to put your home on the market. Buyers need a combination of patience and quick reaction to work through competing offers. While each location inth4e area that I service may be slightly different, overall this advice holds true. It's a great time to be a seller and a somewhat frustrating time to be a buyer.Sellers need to avoid the trap of getting too greedy and overpricing their home and buyers just need patience and persistence
Wednesday, June 10, 2015
From a recent - National Homebuilders Association Press Release (May 26, 2015)
Sales of newly built, single-family homes rose 6.8 percent to a seasonally adjusted annual rate of 517,000 units in April, according to newly released data from HUD and the U.S. Census Bureau.
“Sales are moving forward and our builder members are telling us they are starting to see more activity as more buyers get off the fence and enter the marketplace,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Mo.
“Following an unusually low sales report in March, today’s numbers are consistent with other data we’ve seen recently and indicate a continuing, gradual improvement in the housing market,” said NAHB Chief Economist David Crowe.
Regionally, home sales were mixed, rising 36.8 percent in the Midwest and 5.8 percent in the South. The Northeast posted a 5.6 percent decline and the West fell 2.3 percent.
The inventory of new homes for sale edged up to 205,000 units in April. This is a 4.8-month supply at the current sales pace.
In our area in southeastern-Michigan we can certainly see this trend. While sales of used homes are up too, new homes are selling as fast as they can be built. We still have a “tight market” in Michigan, with more buyers out looking than there are houses for them to look at. Multiple bids and bidding wars for good houses are not uncommon. Houses that are in move-in-ready condition are selling for at or above asking. All of that is good if you are a home seller, but quite frustrating if you are trying to buy.
The tight market has also impacted the rental and lease markets, with both experiencing rising asking prices and very low inventory. Many of the people who lost houses during the great recession are still living in leased homes while they rebuild their credit. It is very difficult to find lease properties, especially those that might accommodate a larger family.
So, what is a buyer to do? Well, for one, this is not a time to be “testing the market”. You are just wasting everyone’s time if you are out looking with no real plan to buy. You need to be pre-qualified and in a position to make an immediate offer. There are no “contingent upon sale of buyers home” offers being accepted these days and no sellers will even look at lowball offers. You should know exactly what your limits are, in case you get involved in a multiple offer situation and have to make your “best and final” offer. You should be prepared to walk away from homes that you really can’t afford, rather than getting swept up in the bidding wars.
You should understand that there will be cash bids that win houses (especially those under $200,000), even if they are a little lower than your bid with a mortgage, because the sellers don’t have to worry about you being successful in the mortgage process and many of those bids will be made without inspections and with a quick close. Most of all, you need to be patient. You will likely lose a d few bids before you have one accepted. Accept that and move on.
As for would-be sellers, now is the time to go for it. We are back to just about pre-recession values, so your house is worth more than ever. Waiting longer, so that you can wring just a little more out of the market also means that the next place that you are planning to buy is going up too, so it’s a wash. The key it to properly price you house; not to overprice it, in hopes of getting a little more. An overpriced house will just sit there; while a properly priced house may result in one of those bidding wars. The best place to be is to have a move-in ready house that has been well –maintained and has been updated. Hopefully you enjoyed those updates as you made them and now they add value in the market.
If you’re looking for a new-build home, don’t be surprised if you stop into a new construction site and discover that all of the sites and homes to be built on them are already sold. It’s that kind of market. If you do succeed in getting in on e one of these new developments, your next challenge is trying to coordinate the sale of your current home on a timetable that will mean only one move. That’s extremely difficult, so have a plan “B” in mind for temporary living somewhere, with your stuff in storage. It’s a pain in the short term, but hopefully worth it in the long run. After all, you’re getting into your new move-up house or maybe your retirement home, so you’ll probably be there for a while.