Now Is a great time to sell to take advantage of the number of buyers who are searching for their dream home. Based on the current state of the market, trends are shifting in favor of sellers.
The best time to sell anything is when demand for that item is high and the supply of that item is limited. The latest Existing-Home Sales Report released by the National Association of Realtors (NAR), reveals that demand for housing continues to be strong, but the supply is struggling to keep pace. With this trend likely continuing throughout 2020, now is a great time to sell your house.
THE EXISTING-HOME SALES REPORT
The most important data revealed in this report was not actually sales. In reality, it was the inventory of homes for sale (supply). The report explained:
Total housing inventory at the end of August decreased 2.6% to 1.86 million homes available for sale.
Unsold inventory is lower than the 4.3-month figure recorded in August 2018.
This represents a 1-month supply at the current sales pace.
According to Lawrence Yun, Chief Economist at NAR,
“Sales are up, but inventory numbers remain low and are thereby pushing up
In real estate, there is a simple guideline that often applies here. Essentially, when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see greater appreciation. Between a 6 to 7-month supply is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and can expect depreciation in home values (see below):As we mentioned before, there is currently a 4.1-month supply of homes on the market, and houses are going under contract fast. The Existing Home Sales Report also shows that 49% of properties were on the market for less than a month when they were sold. In August, properties sold nationally were typically on the market for 31 days. As Yun notes, this should continue,
“As expected, buyers are finding it hard to resist the current rates…The desire to take advantage of these promising conditions is leading more buyers to the market.”
Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market, and supply will fail to catch up with demand if a sizable supply does not enter the market.
If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers who are out there searching for your house to become their dream home. Call or text me at 516-429-9399 for a free market analysis.
Contrary to common misconception, down payment needs are often much less than many believe.
According to the ‘2019 Home Buyer Report’ conducted by Nerdwallet, many first-time buyers still believe they need a 20% down payment to buy a home in today’s market:
“More than 6 in 10 (62%) Americans believe you must put at least 20% down in order to purchase a home.”
When potential homebuyers think they need a 20% down payment to enter the market, they also tend to think they’ll have to wait several years (in some markets) to come up with the necessary funds to buy their dream homes. The report continues to say,
“The truth: 32% of current U.S. homeowners put 5% or less down on their home, according to census data.” (as shown below):
The lack of knowledge about the home-buying process is keeping many motivated buyers on the sidelines.
Don’t let a lack of understanding keep you and your family out of the housing market. Let’s get together to discuss your options today.
The residential real estate market has been plodding along for most of the year. However, three recent reports show there may be a housing market rebound.
The residential real estate market has been plodding along for most of the year. However, three recent reports show the market may be on the verge of a rebound:
1. Existing Home Sales (closed sales) are up, marking two consecutive months of growth.
2. Pending Home Sales(contracts signed) are up with each of the four major regions reporting both month-over-month growth and year-over-year gains in contract activity.
Here is the month-over-month growth:
The Northeast rose 0.7%
The Midwest increased 0.6%
The South increased 1.4%
The West grew 3.1%
3. Buyer Traffic(the number of people shopping for a home) is up compared to the same time last year, and for the first time in 13 months.
The Northeast is up 5.9%
The Midwest increased 1.3%
The South is up 2.7%
The West grew 2.2%
In their most recent report, ShowingTimeChief Analytics Officer, Daniil Cherkasskiy explained:
“The trend we saw in year-over-year buyer traffic in previous months continued across the United States. For all four regions there were more showings per listing this year compared to last year, making it the most competitive August in the last five years.”
Lawrence Yun, Chief Economist with the National Association of Realtors, believes the uptick in activity will continue into the future:
“It is very encouraging that buyers are responding to exceptionally low interest rates…With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020.”
If you are thinking about selling your house, there are purchasers out there who are ready, willing, and able to buy.
The latest edition of the Realtors Confidence Index from NAR sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand). Until the supply of homes for sale starts to meet buyer demand, prices will continue to rise.
The price of any item is determined by supply, as well as the market’s demand for the item. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.
Their latest edition sheds some light on the relationship between home supply vs buyer demand.
The map below was created after asking the question: “How would you rate buyer traffic in your area?”The darker the blue, the stronger the demand for homes is in that area. The survey shows that in 3 of the 50 U.S. states, buyer demand is now very strong; only 2 of the 50 states have a ‘weak’ demand. Overall, buyer demand is slightly lower than this time last year but remains strong.
The index also asked: “How would you rate seller traffic in your area?”As the map below shows, 18 states reported ‘weak’ seller traffic, 29 states and Washington, D.C. reported ‘stable’ seller traffic, and 3 states reported ‘strong’ seller traffic. This means there are fewer homes for sale than what is needed to satisfy the buyers looking for homes.
Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home, let’s get together to capitalize on the demand in our market now.
One of the benefits of homeownership is that it is a “forced savings plan.” Here’s how it works: You make a mortgage payment each month. Part of that payment is applied to the principal balance of your mortgage. Each month you owe less on the home. The difference between the value of the home and what you owe is called equity.
If your home has appreciated since the time you purchased it, that increase in value also raises your equity. Over time, the equity in your home could be substantial. Recently, CoreLogicrevealed that the average homeowner gained more than $65,000 in equity over the last 5 years.
Unlike last decade, homeowners are no longer foolishly tapping into that equity. In 2006-2008, many owners used their homes like an ATM by pulling equity out to purchase new cars, jet skis, or lavish vacations. They were pulling out cash (equity) from an appreciating asset, and then spending it on rapidly depreciating items. That is not happening anymore.
Over 50% of Homes Have at Least 50% Equity
The number of homeowners that currently have at least 50% equity in their home is astonishing. According to the Urban Institute, 37.1% of all homes in the country are mortgage-free. In a home equity study, ATTOM Data Solutions revealed that of the 62.9% of homes with a mortgage, 25.6% have at least 50% equity. That number has been increasing over the last five years:
By doing a little math, we can see that 53.2% of all homes in this country have at least 50% equity right now. Of all homes, 37.1% are mortgage-free and an additional 16.1% with a mortgage have at least 50% equity.
Homeownership is different than renting. When you own, your housing expense (the mortgage payment) comes back to you in the form of equity in your home. That doesn’t happen with your rent payment. Your rent helps build your landlord’s equity instead.