If Dickens were describing our housing market he might call this “A Tale of Two Markets”. There are homes selling quickly while others languish on the market. What’s at play?
The first thing to consider is pricing. Over the four years from 2003-2006, our average prices climbed 13.4% each year. This was simply not sustainable when historical average gains over the past 25 years are closer to 6% each year.
It is not surprising then to see the average sales price of a single family home down 4.5% from September 2007, as price gains trend back to historic levels. While our market’s adjustment is nowhere near the 35% price correction seen in California, local buyers are recognizing the need to carefully consider price.
Yet even with all the media discussion of poor sales and slacking prices, buyers are still active in our market. The number of homes sold in Thurston County is on par with 2002 levels (year prior to the start of our 4 year hot seller’s market).
Today’s buyers are simply looking for value. When they see it, they are quick to move. Our studies show homes that did not require a price reduction to sell were moving in an average of just 34 days. This is 9 days faster that the peak of our seller’s market in 2006.
Conversely, homes that required at least one price reduction are waiting, on average, 163 days to sell. These homes are going under contract in just 25 days when they reach the final asking price. This fact tells us that buyers are willing to move quickly when they see value.
In this market, the seller’s risk is not so much in overpricing – almost 65% of sellers are in that boat – so much as in not reacting to the market. When an active market like ours does not generate showings or an offer, the price should be repositioned until it does. Our research indicates that the buyers are jumping in when they finally see the right price.
Our advice to sellers is to price aggressively compared to the competition and then quickly reposition price if an offer does not come within the first several weeks.
The good news for sellers is that a lower average price does not always mean money lost.
So much attention in real estate is on the shrinking values of homes, with average or median sales prices often quoted. To be sure, there are homeowners who are selling for less than they paid, even in our relatively steady market. However, the vast majority of Thurston County sellers are still making nice returns.Our continuing study of repeat sales examines all homes sold and determines the appreciation for each home. We then group those by the number of years the seller was in the home.
As in prior studies we’ve shared, the most recent report from August and September home sales shows that homeowners who have been in their homes at least three years are seeing gains right in line with our market’s historical performance. The average homeowner stays six years in one home.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Wednesday, October 29, 2008
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