In February, the trend of increasing inventory and price stabilization continued unabated. I’m often asked, “How’s the Market”? As in all aspects of life, it often isn’t black or white, i.e., Buyer’s Market or Seller’s Market. More often it is shades of grey, a little bit of both, somewhere in between. In February it was somewhere in between.
It is a Buyer’s Market when it comes to choices. There are more homes for sale. Inventory has increased. It is taking longer to sell a home. The ratio between sold and original list price is falling. Buyers are taking their time. There is no sense of urgency. They are savvy. They are tuned into the market, both as to value, how prices are trending, comparable competition, the comparative cost and convenience of new vs. resale, and popular design trends and features.
It is a Neutral Market when it comes to prices. Although the supply of homes for sale is increasing, looking at the Market broadly, it has not resulted, yet, in a softening of prices. But, it has put a lid on continued price appreciation. The Average for Sale Price, Average Sold Price, Average Sold Price per Square Footage, and Median Sold Price are all neutral. Pended Sales are up, which, when closed over the next 2 months, will indicate the future direction of sold prices.
Stats for February 2018 | All Residential Property: - For Sale – 5,896 – Buyer’s Market; It is up 2% compared to last month (Jan 2019), and up 15.7% compared to last year (Feb 2018).
- New Listings – 1,641 – Buyer’s Market; It is down 22.2% compared to last month, and down 6.7% compared to last year.
- Closed Listings – 888 – Buyer’s Market; It is up 27.8% compared to last month, and down 4.5% compared to last year.
- Under Contract – 1,278 – Neutral Market as to # of Pending Sales | TBD at Closing Re Sold Price Direction; It is up 10.9% compared to last month, and up 1.6% compared to last year.
- Average Days on Market – 90 – Rising – Buyer’s Market; It is up 20% compared to last moth, and up 16.9% compared to last year.
- Sold/Original List Price Ratio – 91% - Falling – Buyer’s Market; It is down 1.1% compared to last month, and down 2.2% compared to last year.
- Average for Sale Price - $627,000 – Neutral Market; It is up 0.3% compared to last month, and down 2.2% compared to last year.
- Average Sold Price - $379,000 - Neutral Market; It is down 1.8% compared to last month, and down 4.3% compared to last year.
- Average Sold Price per Square Foot - $214/sq. ft. – Neutral Market; It is down 1.8% fcompared to last month, and down 5.7% compared to last year.
- Median Sold Price - $260,000 – Neutral Market; It is the same as compared to last moth, and up 6.1$ compared to last year.
- Months of Inventory Based on Closed Sales – 6.6 months – Buyer’s Market; It is down 20.4% compared to last month, and up 20.1% compared to last year.
- Months of Inventory Based on Pended Sales – 4.6 – Neutral Market; It is up 12.3% compared to last year, and down 8% compared to last month.
In a Shifting Market as we have today, Sellers needs to understand the Buyers’ mindset. The size of the Federal Reserve’s Balance Sheet has quadrupled. On February 22nd the Fed said it will be patient with future rate hikes, which has already led to lower mortgage rates by 60 basis points. When mortgage rates come down, it generally takes about 2 months for the housing market to react. Deregulation by the Trump Administration, the US and China getting closer to a trade deal, the 2017 Tax Cuts and Jobs Act, and continued low unemployment and rising wages will likely continue to extend our economy. Nevertheless, questions remain: The deceleration in Europe and material slowdown in China; the health of the US economy, noting that the US nonfarm payrolls rose a seasonally adjusted 20,000 in February, well short of the economists’ expectation of 180,000 new jobs; and, volatility and gyrations in the stock market after the third biggest ever bull rally (S&P up 305%), marking 10 years this month. Housing prices, although a challenge for many first-time home buyers, appear to be at sustainable levels. According to CoreLogic, home prices are 15% off the peak of 2006. Home prices started their run-up in 2012, 7 years ago. Nothing lasts forever, the economy moves in cycles, not in a perpetual upward trajectory. It has been exactly 10 years since the end of the “Great Recession”. Looking at historical averages, every 7 – 9 years is marked by a recession. So, all in all, it seems to me that over the next year we are bound to see, if not a recession, then a slowdown. There are too many looming headwinds not to be cautious. Inundated with conflicting data, uncertainty and past experiences, today’s Buyer is naturally cynical. As a Seller, it poses the question: How do you position yourself when Buyers have many choices in a shifting unsettled market? These cynical/savvy buyers are looking at homes with an eye towards value, resale, investment. They are looking at design, features, location, amenities, age and cost. Before you list your home for sale you need to understand and analyze what you are selling. Are you selling a home that you have used and is tired, or are you selling a home that you have upgraded and positioned to sell? If it has been upgraded, is there a holistic uniform consistency to the design or is it choppy with different competing design elements? When it comes to larger homes, pools are generally a must. As in all aspects of life, first impressions are critically important, so make sure the exterior walls look freshly painted, roof, gutters, driveway, walkway, lanai and cage clean. If your home has a preserve setting, then it has to be lush, manicured and suitably maintained. Pay attention to the details. Make sure your windows sparkle, interior clutter free and clean, surfaces bare, closets with open space. Look at your home through the eyes of a buyer, as if you are seeing it for the first time, without “your stuff”. As Marie Kondo of the Netflix series “Tidying Up with Marie Kondo” says, “Look at your house, look at what’s in it and ask yourself, does this bring me joy”? Or more to the point, as a Seller, the question to ask yourself is “Will this bring a Buyer joy”? If not, then as my wife Luisa is prone to say, “When in doubt, throw it out”.
