Chasing the market
As the saying goes which do you want first the good news or the bad news?
Let’s start with the good news, the sky is not falling and homes are still selling! Now the bad news, the homes that are selling are taking longer to sell and not selling for more but selling for the same or less then the recent closed comparables.
What’s happening, in a word inventory! The lack of homes for sale is what has fueled the surge in home prices over the last few years. The year over year stats paint a new picture:
- Numbers of active listings are up 15.3%
- Average days on market (time to sell) up 19.51%
- Absorption rate (the time it takes to sell the inventory) is up 33.59%
- Numbers of sold homes are down 18.7%
More homes are for sale for a longer period of time and selling to fewer buyers. What does this mean to buyers and sellers? Buyers now have more choices and more time to make those choices. Sellers need to acknowledge the market conditions and price accordingly. Sellers will still be selling at all time highs, maybe just not as high as 6 months or a year ago.
The worst thing a seller can do is “Chase the market”!
For example, a Realtor comes to your home and based on previous sales, and more importantly current competition, suggests a list price of $949,000. The seller says “my neighbor sold for $950,000 so I want to ask $999,000 and the Realtor lists the home for $999,000. After six months the seller says “wow you were right” and wants to reduce the home to $949,000. The problem with this situation is that during the six months new homes, competition has entered the market and now the correct price should be $899,000. The seller is chasing the market down and will ultimately sell for less than the original suggested price.
Moral of the story? List with a knowledgeable Realtor who knows the market and take their advice on pricing!