Balanced Market! - February 15, 2014
I’m frequently asked “when should we sell?” If you have a choice (sometimes we do not have a choice!), selling in a balanced market (like today) can be one of the best times to sell. Here are some facts relating to selling your residence, now:
1. Price appreciation flattens in a flat market. Prices are always a trailing indicator in housing. This means that anywhere from 9-18 months after something happens in the market - it is reflected in prices. The market started shifting away from a seller's market in June 2013 when buyer demand started to fade. Pricing runs on “fumes” for a while before evaporating. That "fume" stage is a sweet spot for sellers because prices are gently floating up, word is not really out on the street that the shift has occurred, and the big future price appreciation that sellers would miss out on if they sell in a “seller's market” - is not being missed. In other words, when prices go flat - sellers are selling at a peak.
2. In a balanced market, builders remain conservative, adding only a small supply of new homes. In a strong seller's market, builders - just like any other seller - want to cash in on the strong appreciation. This starts adding more and more supply of homes - which we observed in 2005 - and can create a bubble that "pops" when supply becomes glutted. As we know all too well, recovery can be painful and slow after that pop.
3. In a strong sellers’ market, successful sellers become "homeless" when they are unable to find a home to buy. Sellers who are buying locally, enjoy the power a seller's market provides them as a seller, but then find themselves stressed and panicked when trying to buy in that same market. This can lead to poor buying decisions and huge concessions to obtain a home.
4. Fewer problems with low appraisals. An often overlooked problem in a strong seller's market is the financing piece. Lenders base all their numbers on the appraised value of a home. In a rising market, prices begin escalating over yesterday's pricing. While sellers often get a higher than expected yield at point of contract, they can find themselves giving that money back to the buyer when the appraisal comes in low or risk the transaction cancelling.
5. In today’s balanced market, there are enough buyers around to sell without great difficulty. A balanced market means buyers and sellers are in equal supply. So although the "feeding frenzy" may not be present, the buyers are still viewing and buying properly marketed properties in sufficient quantity to make selling a relatively easy and fast process.
How long will our market stay balanced? That is the million dollar question. At the moment, we see nothing dramatically pulling the market one way or another. As always, we will do our best to keep you informed on the Valley's volatile housing market. Call on me any time with your questions, to review a complimentary market analysis of your situation, or simply to say “Hello”. I look forward to earning the opportunity to further serve your real estate needs. I may be reached at 480-239-3023 or email@example.com