Real Estate Market Update February 2014

The real estate market was really bad in January!

That might be a little bit of an exaggeration, but before we talk about what was so bad about it, let’s take a detour into an operating room.

Blood

The patient is wheeled into the room and various masked individuals go to work preparing for the surgery. There is washing, marking, shaving, and then the scalpel comes out. Now is the moment when they really get started. The scalpel comes down on flesh with immediate results. There is suction and sponging. None of the doctors seem at all concerned. But an intern has been standing in the corner watching the proceedings with growing horror. “Stop!” he screams. The doctors look up at the monitors and each other in alarm. Seeing nothing of concern, they turn to the intern.

 “What seems to be the problem?” they ask.

His latex covered hand shaking, the young man points at the patient, “He’s bleeding!”

“Yes, that’s what’s supposed to be happening at this point in the operation. In fact, it’s what happens every time we do this.” But their calming words are lost on the intern who has already slipped to the floor in a faint.

Market Summary

• Fewer homes sold in January than at any other point in the last two years.
• The average sales price for houses was stagnant.
• For the first time in over a year the average number of days to sell a home was over 60.
• Just like in December, sellers are still having to give up about 5% in their negotiations.
• We had far more houses come on the market than leave the market because they sold.

Paper Bag

In the face of this seemingly dismal news, it would be a good idea to put a paper bag over our mouth to avoid fainting like our poor intern. The fact is that there is a pretty good downturn every January. You could almost say it’s what’s supposed to happen at this time of year. There is no cause for alarm.

As a matter of fact, there is cause for some realistic optimism if we look a bit closer at the numbers.

• In terms of numbers of sales, we’re almost exactly where we were at this point last year, and look what a great year that was!
• After a huge increase in value last year, prices haven’t fallen showing us that this wasn’t a speculative bubble. With so many similar factors in place, we could be set for even more appreciation this year!
• In a balanced market, the average Days On Market is normally between 60 and 90. It’s nice to think that buyers might not have to run around like frightened rabbits anymore (for the moment)!
• Sellers having to negotiate 5% for the second month in a row could show that the market is coming into a better balance which keeps us away from the danger of another bubble.
• With our small inventory, we really needed the boost in houses for sale that January always brings.

So let’s not panic at the sight of a little blood. This is exactly what we expected.

Highlights for Sellers

• January is normally the start of a wave of new listings that runs through the first half of the year. Get your house on the market before you're competing with a lot of additional sellers.
• Interest rates rose last year and are expected to do so again this year. That will eat into the amount that buyers are able to afford. Help your buyer get locked into a payment they can handle now and in so doing, secure the sales price you want.

Highlights for Buyers

• There haven’t been this many houses on the market all at the same time in several months. Get out there and start looking before they are all picked over!
• Interest rates are expected to rise again this year. That will decrease the purchase price you can afford. Values are expected to go up again as well. Get the house you want now before you have to settle.