Listing Agent: Advice For Sellers In Today’s Market
If you are thinking about selling your house, here is some advice and the latest stats from a Charleston SC listing agent.
So, here are the latest stats explained for what is happening in the current real estate market.
Home Sales are up. Pending Sales are up. Home values continue to increase.
There is a strong demand from buyers out there. One thing that is holding the market back–inventory. Or, a lack of inventory.
First, here is a look at the latest home sales numbers:
Part of this can be explained by the fact that buyers have been very active to start 2015. Traditionally, buyer activity doesn’t heat up until the Spring. But that hasn’t been the case so far in 2015.
This has been reflected in the number of Pending Sales. February saw the highest number of Pending Sales since June 2013. Based on what I have seen in the Charleston area, I expect Pending Sales to increase in March. (The March Pending Sales numbers will be released this week)
You can see in the graph that Pending Sales are way above where they were in February 2014. Additionally, they are well above the Historically Healthy Level of 100 (this is not the number of Pending Sales, rather an index created by the National Association of Realtors).
Here is another look at the year-over-year increase of Pending Sales, broken down by region:
Pending Sales are an indicator of future sales.
These are homes under contract that will be closing in the next 30-60 days.
Not all homes under contract will close, but the Closed Sales numbers generally reflect the previous months’ Pending Sales numbers.
Here is one more graph to show buyer activity–Foot Traffic. This is from the National Association of Realtors and measures the amount of people actively looking at homes:
Foot Traffic for February 2015 is double that of February 2014. Foot Traffic leads to Pending Sales, which lead to Closed Sales. As you can see, the buyers in today’s market aren’t waiting for Spring–they are already out in full force.
So, things are already heating up in the real estate market, and the forecast for 2015 so far is looking good. But there is one obstacle that is holding back the market–lack of inventory.
But don’t just take my word for it, let me back it up with facts and quotes from the experts.
Despite the need for more inventory, inventory levels have actually declined in recent months.
So far in 2015, each month has seen a decline in year-over-year inventory levels.
A normal or neutral real estate market will have 6 months inventory. Under that indicates a sellers market.
Over the course of 2014 the national real estate market remained below the 6 month level.
However, as 2014 turned into 2015, the level of inventory continued to drop. As a result, home prices continue to rise–demand exceeded supply.
This is good news to home sellers, but they need to heed caution. While increasing prices is a good thing if you are thinking about selling, they could also backfire on you.
If home prices continue to rise, it is possible that some would be buyers are priced out of the market. This could dry up some of your potential buyer pool.
It could also mean that you might get priced out of your next home as well. And this is an important segment of the market that can help solve the market’s biggest issue–the move up buyer.
The Move Up Buyer Affect
Traditionally, people have sold homes every 6 or 7 years. Today, people are staying in their homes closer to 9 or 10 years. Part of this can be explained by the housing market crash–for many home owners selling hasn’t been an option because many were in a negative equity situation.
Another reason is many home owners saw what happened when the real estate market crashed, and are fearful of another crash.
However, thanks to home values rebounding over the last 3 years, not many home owners are still under water. Plus, despite a big breakout in 2013, the housing market settled in 2014. Home values are continuing to rise, but the rate at which they are appreciating has slowed closer to normal, sustainable levels. (The “normal” rate of appreciation over more than 100 years has been in the 3%-4% range).
That is, until recently. Due to low inventory levels, the rate of home appreciation is starting to rise again.
There is no reason to panic, but it is worth watching. If inventory remains low, home values will appreciate at a much higher rate than we’ve seen in the last 6 months.
If we start seeing appreciation rates that we saw in 2013 and into the first half of 2014, then we could see trouble.
The First Time Home Buyer Affect
A big segment of the real estate market is the first time buyer. But first time buyers are being held back by the lack of inventory.
There are many home owners that are still in their first home. They purchased during the big real estate boom, or worse, after the market started to decline.
These home owners have homes that appeal to first time buyers. These are usually starter homes that are within the price ranges of first time buyers.
If more of these home owners would understand better what is happening in the current market, they would see the potential that is there.
The real estate market is doing very well, and looks to continue to grow for the next few years. Real estate is a good investment for the foreseeable near future.
Home values are expected to continue to rise–and this is the projections of the experts, and not just one listing agent’s opinion.
The Move Up Buyer Sweet Spot
Potential move up buyers are in a “sweet spot” of the market. First, the demand for houses exceeds supply.
Second, we are moving into the traditional selling season, late Spring and Summer.
Move up buyers can also control their destiny right now, to a certain extent. If inventory levels remain low, then home prices will continue to be driven up–faster than they should.
This can lead to potential buyers being priced out of the market-the buyers for your home, and it could mean the home you want may not be affordable if you wait.
Selling now gives you more potential buyers for your home, and more potential homes for you to choose from to buy.
You can also take advantage of near historical low interest rates–below 4%. This means your next home is more affordable now, as opposed to later this year or into 2016 when interest rates are expected to rise by as much as 1% or more.
Another benefit is you will enjoy the rising home prices because you will be building that much more equity faster in your new, more expensive home.
There is also a good chance that you have outgrown your current home, and you can’t put a value on your family’s comfort and enjoyment.
Getting Your Home Sold
So, you realize that it is a great time and a great market to sell your house. Any listing agent will do in a sellers market, right?
Wrong. Even in today’s market it is still important to choose the right listing agent.
One of the most important factors even in a hot sellers market is getting your home priced right from the beginning of your home hitting the market.
Even with all of the strong buyer demand out there, buyers are ignoring overpriced homes.
Exposure in front of as many buyers in the marketplace as possible is still important to getting sold.
And you get more exposure by being priced right–the best marketing in the world will not sell an overpriced listing.
Just to get a better idea of how important this is, take a look at this infograph:
In this current market in which the buyers are out there in droves and inventory is severely lacking, what do you think might happen to a listing priced 10% below market value?
Other factors are still important in selling a home in today’s market. Make sure you have good curb appeal, your home is in the best condition (today’s buyers don’t want a home with issues or require some “TLC”), and it is ready to show.
All of these together will result in a fast home sale, for top dollar. This will allow you to take advantage of today’s prices and interest rates to buy your next home.
Bottom line: the current real estate market needs more listings!
If you are thinking about selling your home in the Charleston SC area, it is important that you choose the right Charleston SC listing agent.
Bee sure to visit my Pam Marshall Realtor sellers page and learn more about why I am the best Charleston SC listing agent to get your home sold!