I grew up in a charming handcrafted home on 35th in the West Highlands. Built in 1922 by the owner of a local lumber yard. It seemed like every house in the neighborhood was
To Sell Or Not To Sell
by The KCM Crew on July 3, 2014
We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now may be the best time to sell your house. Let’s look at the data covered by the latest Pending Home Sales Report and Existing Home Sales Report.
THE PENDING HOME SALES REPORTThe report announced that pending home sales (homes going into contract) “surged” by 6.1%. The increase was “the largest month-over-month gain since April 2010, when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended”. Lawrence Yun, NAR’s chief economist, expects improving home sales throughout the rest of the year: “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation.” Takeaway: Demand is beginning to increase dramatically compared to earlier in the year.
THE EXISTING HOME SALES REPORTThe most important data point revealed in the report was not sales but instead the inventory of homes on the market (supply). The report explained:
- Total housing inventory climbed 2.2% to 2.28 million homes available for sale
- That represents a 5.6-month supply at the current sales pace
- Unsold inventory is 6.0% higher than a year ago
- “Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market.” In real estate, there is a guideline that often applies. When there is less than 6 months inventory available, we are in a sellers’ market and we will see appreciation. Between 6-7 months is a neutral market where prices will increase at the rate of inflation. More than 7 months inventory means we are in a buyers’ market and should expect depreciation in home values. As Yun notes, we are currently in a sellers’ market (prices still increasing) but are headed to a neutral market.
- "New home construction is still needed to keep prices and housing supply healthy in the long run.” As new construction begins to be built, there will be increased downward pressure on the prices of existing homes on the market.
Bottom LineIf you are going to sell, now may be the time.
Marc Blitstein has been a licensed Real Estate Agent since 2004. Real estate experience has been in employee relocation, residential property, short sales, investment property, and bank owned property....