April sales took a nice jump, gaining back some of the delayed sales from January through March. Although spring sales are moving up, the combination of fewer homes to purchase and reduced buying power will keep sales from making up all of the decline we saw in the first quarter (compared to last year). We still see 2014 as a strong real estate year across all markets and price ranges, however about 5-7% down from last year in terms of total homes sold.
One of the biggest logs in the dam holding back a flood of new listings is the seller’s “Move Up Spiral.” With many homes selling quickly, sellers are afraid to put their home on the market until they find a home to buy to avoid an intermediate move. Imagine if all sellers held back for that reason, there would be very few, if any, homes to purchase. On the other hand, if all of those sellers let us know of their intent to sell (even if they did not specifically put their home on the market), our matchmaking skills would take over, creating additional sales and breaking up the log jam. We do see this now, with about 10% or more of our sales “creative,” meaning transactions where the properties were not specifically on the market.
We have successfully used sales contracts with extended closing and occupancy dates to give sellers more time to look for a home and many sellers are arranging for an interim move. Although not convenient, it does give sellers certainty. Our most successful strategy has been simply reaching out to homeowners in targeted areas via mail, social media or even door to door with messages about the new home needs of our sellers (aka hesitant buyers) to find that other reluctant seller whose home fits our clients’ needs.
One area to watch is some creeping overconfidence on the part of some sellers as a result of media and our own discussion of double-digit appreciation and bidding over asking price. Values are rising quickly and 68% of all home listings are selling in 90 days or less. However, homes are still selling on average at 96% of list price, so buyers are aggressive, but within a relatively narrow value range. Buyer activity is always the best gauge of whether a home is at the right price point. Under the current market conditions if the property is priced correctly, showing activity should be immediate and there should be at least one offer in the first 30 days (markets over $500,000 will have a slower activity pace).
Our monthly charts break down the markets by under and over $100,000 segments. If we move upstream a bit in price the differences in markets become even stronger. Here is a snapshot of the market change from April of 2013 using a $200,000 price point. Both are moving in the same general direction but at different paces: the inventory levels under $200,000 show dramatic declines, while the over $200,000 is more modest. A buyer looking in either segment will experience some inventory frustration.