Just like with any product or service, the law of supply and demand impacts home prices. Any time that there is less inventory than the market demands, prices increase.
In many areas of the country, the supply of homes for sale in the starter and trade-up home markets is so low that bidding wars have ensued, and the busy spring-buying season is just around the corner.
I remember back in the early 90’s in California. Shoddily constructed homes in Orange County CA, built on shaved, terraced slopes were being snatched up through auctions offered by new builders. A friend of ours almost got stuck with one of these, but came to her senses at the last minute and was able to back out of the deal. The other partner in the home went through with it after finding another gambler to finance it. Less than ONE year later, Southern California had one of those severely rainy seasons and… yes… the BRAND NEW house and a few of the others in that neighborhood all slid down the hill. Most were without flood insurance, and they were definitely without landslide insurance riders – different deal. She’s still grateful she came to her senses. We can get caught up in the want to move, and sometimes it’s a need, but don’t let it cloud your due-diligence. Have your limits set – really set. Get soil reports, “what was there before” reports. Know the history of the house, the land, the builder. Check county records.
Time’s have changed. Many auctions are handled online only. Be prepared.
CoreLogic recently conducted an analysis on national home prices at the time of sale for their January 2018 MarketPulse Report and found that a third of homes sold for at least list price.
“The share selling above list price was almost three times the trough in January 2008 and represented more than one-fifth of total sales.”
Many markets in the western part of the country and around major cities are experiencing higher shares of homes selling above list price.
“San Francisco had the largest share of homes—76 percent—that sold for at least the list price, and Seattle and Los Angeles followed with 63 and 51 percent, respectively. Miami had the lowest share—16 percent—of homes selling at or above the list price.”
Increased demand during the spring and summer months, the traditionally busier seasons for real estate, will no doubt influence how many homes continue to sell over list price.
This should not be seen by sellers as permission to overprice their homes, though. Buyers are becoming more and more educated, especially those who have been searching for their dream homes for a while now while waiting for new inventory to come to market.
Realtor.com gives this advice:
“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”
Low inventory levels here in the Northeast Georgia area
With employment growth, projections of new businesses, and our low inventory levels are making it harder and harder for buyer’s to find affordable homes. This is of course great news for those who want to sell their home. We are seeing inventory levels down to a 2.7 month supply at this time. Rentals are also at an extremely low inventory right now.
Without a large wave of new listings coming to market, buyers will continue competing with each other for the homes that are available. If you are thinking of selling your home, now may be the time to do so before more competition comes this spring. Let’s get together to determine the demand for your house in our area. Contact us today and lets do an analysis of what your home is worth today!