- Vacation Home Sales were up 57.4% in 2014
- 1.13 Million Vacation Homes Sold
- 2014 marked the highest level of sales in the U.S. since 2003
Every seller wants to get the best price for their house. We learned in high school that the best price for any item will be determined by the demand for that item relative to the supply of that item.
According to Nationwide’s recently unveiled, Health of Housing Market (HoHM) Report, the US housing market is at it’s healthiest levels since the index’s creation in 2001.
The index analyzes the health of the housing market across the country and in 373 metro areas every quarter. Using the data that they have collected over the past 15 years, Nationwide will look to give a “data-driven view of the near-term performance of housing markets based upon current health indicators.”
The fourth quarter of 2014 ended with the highest indicator score in over 15 years of data analyzed by the study at 109.8. The report explains:
“An index value over 100 suggests that the national housing market is healthy, with lower chances of a housing downturn over the next year as the index moves increasingly above the 100 breakeven value.”
Employment, demographics, the mortgage market, and housing prices are all used to evaluate the health of each market. The top 10 healthiest housing markets according to the index are:
The two ‘least healthy’ markets were Bismark, ND and Atlantic City, NJ who received “just slightly negative performance rankings”.
David Berson, Nationwide’s Chief Economist and Senior Vice President, says “the quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”
The housing market continues to recover and surpass recent history. Meet with an agent in your local market to determine if you are able to take advantage of the opportunities available in real estate today.
The most recent Pending Homes Sales Index from the National Association of Realtors revealed that homes going into contract in February increased to their highest level since June 2013.
The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The Index is now 12.0 percent above February 2014. The index is at its highest level since June 2013, has increased year-over-year for six consecutive months and is above what is considered “the average level of activity” – for the 10th consecutive month.
Here is a graph showing the Pending Sales numbers:
Here is a chart showing the Pending Sales increases by region:
In an article from Investors’ Business Daily, Lawrence Yun, Chief Economist at the National Association of Realtors, explained what these numbers will mean to the overall market:
“It looks like the buyers want to come out to the market and they are eager to find the right home and make an offer. Therefore, I expect the second quarter of this year to be easily ahead of last year in terms of sales activity. Pending contracts are implying that the closing activity in coming months will be quite solid.”
In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.
Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.
John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:
“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”
Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.
Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.
Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!
A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.
Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?
Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.
Last week, we reported on the lack of housing supply and how that was impacting the real estate market. Today, we want to let you know what other industry experts are saying.
“It’s kind of a seesaw right now between supply and demand. One of the reasons for fewer sales is not so much a lack of demand but a lack of supply, especially in the price range the majority of buyers were looking for.”
“Total sales are still running below expectations for the year. Don’t blame winter weather, though. Blame the lack of supply.”
“Inventory is still very low (down 0.5% year-over-year in February). This will be important to watch over the next month at the start of the spring buying season.”
“Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels. Stronger price growth is a boon for homeowners looking to build additional equity.”
“The National Housing Trend Report shows that inventory has decreased 10.9 percent year over year.”
“Tight inventory is a main reason the ball is still in the sellers’ court.”
“We’re a bit low on the supply-side which could force prices up for buyers, further hammering home that we’re in a seller’s market.”
If you are debating putting your home on the market this year, now may be the time. The number of buyers ready and willing to make a purchase is at the highest level in years. Contact a local professional in your area to get the process started.
As the temperature rises, buyers are coming out ready to purchase their dream home. Inventory is still below historic numbers and demand is strong. Don’t miss out on this great opportunity for you and your family.
Here are five reasons to list your home now.
Foot traffic refers to the number of people out actually physically looking at homes right now. The latest foot traffic numbers show that there are more prospective purchasers currently looking at homes than at any other time in the last 12 months which includes last spring’s buyers’ market. These buyers are ready, willing and able to purchase… and are in the market right now!
Take advantage of the buyer activity currently in the market.
Housing supply just dropped to 4.6 months, which is under the 6 months’ supply that is needed for a normal housing market. This means, in many areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.
There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.
Also, new construction of single-family homes is again beginning to increase. A study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).
The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.
One of the biggest challenges of the housing market in recent times has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. As the market heats up, banks will be inundated with loan inquiries causing closing timelines to lengthen. Selling now will make the process quicker & simpler.
If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19.3% from now to 2019. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate under 4% right now. Rates are projected to increase by about three quarters of a percent by the end of 2015.
Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.