Whether in a conversation or a relationship, it is easy to be on two different pages that can cause a conflict. As individuals, we can work to listen and to come to a common understanding that makes a conversation a discussion rather than an argument.
The current dilemma of more Chesapeake buyers than there are for the low to mid-range homes available is tough. It isn’t that there are too many buyers!!! The situation is caused by too many home owners that want to downsize or buy the bigger home needed believing “the time is not right”.
In these Chesapeake home owner minds, the “time is not right” comes from two vantage points:
1. “My house is underwater and I am not bringing money to the table to sell”
2. “The market is improving. I am going to sell when it is at its peak!!”
Both thoughts are erroneous in their own way. Most home owners now, due to the market, have enough equity to sell and make the move desired.
The Chesapeake seller waiting for the market to peak is like an investor believing he or she can pick the low point of the stock market to buy stock the high point to cleanup. It just isn’t possible! About the time the market, stock or real estate, hits its peak, the market “crashes” or at least corrects!!
Such a seller should list now as the market is rising to ensure he or she gets the best price possible at a given time. They have to realize they pay what they get: if they can get 10% more for their home in 2017 vs 2016, for example, they likely will pay 10% more for the new house than they would have in 2016.
It is the way it works.
The inventory of existing homes for sale in today’s market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20th consecutive month of year-over-year drops.
Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up.
As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.
Recently Trulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching.
Homes are generally bucketed into three groups by price range: starter, trade-up, and premium.
Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”
The results of their latest analysis are detailed in the chart below.
Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory.
Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.
“It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”
Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon:
“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”
Real estate is local. If you are thinking about buying OR selling this spring, let’s get together to discuss the exact market conditions in your area.
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