First Alliance Title/Your Castle RE last week had a great article in their newsletter about our market slowing down with higher days on market and more price reductions. So, is something "wrong" or is this seasonal and "normal"?
So, they analyzed home sales between the 4th quarter of 2015 and 3rd quarter of 2017 for the 6 county metro area and they specifically looked at the percentage of homes that needed a price reduction before selling. Here is what they found-
- From January to March fewer than 20% of homes needed a price reduction before selling.
- In April a little over 20% of homes needed a price drop before selling.
- In May about 25% of homes need a price reduction.
- The percentage of homes needing a price reduction before selling continue to rise through September with more than 30% of homes needing a price reduction from June through September.
- The in October this percentage begins to drop to roughly 32%.
- In November only about 25% of homes needed a price drop before selling and the percentage drops to just above 20% in December.
Then you combine this with Your Castle's Showings Chart that reveals the number of showings per home in a month for all of Your Castle's listings this makes SENSE. Every year we see buyer demand at the highest levels from January through May with the highest demand in April. The number of showings drops off every year in June thru November with a pickup in showings in December.
Our market is mis-matched. Buyers want to buy early in the year when supply is limited as the highest number of listings appear in June thru August, when remaining buyers are on vacation or too frustrated to even look at more homes.
Thus, 3 things happen in the summer time. Sellers and their agents use comps that sold in the last 2-3 months when demand was stronger and price their homes high assuming that this high level of demand continues in the summer time. Since buyer demand is lower in the summer, Days on Market will increase and sellers are forced to drop their prices.
So, what can we learn from this? First, for sellers you may want to consider pricing your homes a little below those spring comps that got bid up through bidding wars when demand was at its peak. Second, for buyers NOW IS THE TIME TO BUY!!! Do yourself a favor and don't wait until the New Year to try to buy a home. Instead, buy in the summer or fall.
Courtesy of Lonnie Glessner, Nova Home Loans