Where are home prices heading?
Market prices for homes are controlled by several factors:
- The supply of homes listed for sale (on the market)
- The number of home buyers looking for homes
- The mortgage interest rate
- The general economy
- Buyer & Seller attitudes
Let’s look at each of these factors.
Supply of homes for sale (or inventory, as we in the business call it).
A “normal” or neutral real estate market has 5-6 months worth of inventory. That is, it would take that period of time to sell all the homes on the market if no other homes were listed during that same time frame. Under 5 months of inventory and it’s considered a buyer’s market, and over 6 months of inventory and it’s a seller’s market. Currently, we have less than 2 months worth of inventory
Number of buyers looking for homes
As the number of people looking for homes increases, the demand goes up. If you combine a large number of buyers with a low inventory, the demand is very high. When this happens sellers start receiving multiple offers on their properties and buyers start going over asking price in order to beat out their competition. This drives up sale prices and in turn, new home sellers start to list their properties higher.
You take the inventory of homes for sale and combine it with the number of people who want to buy a home, and you have the basic Supply & Demand law of economics.
But there are other factors that can influence the real estate market.
The record low mortgage interest rates we have seen during the last couple of years made owning a home affordable for many more people than in the past. Now that interest rates are climbing, the payments on a home go up. That makes a home less affordable and thus drives down the price.
The general economy affects home prices because if a potential buyer doesn’t feel confident about taking on a $1,500+ per month 30-year mortgage, (s)he is probably going to hold off until the comfort level returns. In a down economy, people are worried about losing their jobs, and they don’t want to add to their debt load.
All of these factors can affect one region of the country but not another because of local economic factors.
Though most of Essex County in Massachusetts have seen the prices of homes go up from a year ago, there were 10 towns who saw a decline in sales prices in the 3rd quarter of 2017 vs 2016.
There is a tie between two towns that had the highest drop in their median home sale prices – Lynnfield and Manchester-by-the-Sea. These two towns had a 13% decrease in sale price during the 3rd quarter. The other towns that had a drop of their sale price are Newbury (-9.1%), West Newbury (-8.1%), Hamilton (-6.8%), Groveland (-5.4%), Merrimac (-3.2%), Haverhill – 01832 area code (-1.6%), Andover (-1.4%0 and North Andover (-0.4%).
The market has definitely seen some softening in the latter part of this year, however, because the inventory of Massachusetts homes for sale is still extremely low, supply vs. demand is going to keep home prices up for quite a while.
What about people who own homes in the towns listed above? Is this something that those homeowners should be concerned about? Those price drops are only for one quarter of the year, which really doesn’t show the true picture of the market. However, it can show trends. Most of these towns will end up with increased sales prices overall when we look at the data for the full year at the end of December.
If we look back on the 1st and 2nd quarters of 2017 There are a couple of towns that may need some watching. Merrimac also had price drops in the 1st and second quarter of this year, for an average of -6.13% Jan-Aug 2017 vs 2016. However, it looks like Merrimac is going to have a good 4th quarter which should pull them Manchester-by-the-Sea had a price drop of 45.3% in the first quarter and an increase of 13% in the 2nd quarter. The problem with the stats for Manchester is in the first quarter there are less than 10 homes sold each year. This is not enough sales to derive any statistical information, which is why I look at any housing stats that contain other than a full year’s worth of data with skepticism.
Looking at Essex County homes as a whole with year-to-date data, the median single-family home price has increased 7.5% in 2017 vs 2016. The average Days to Offer is 13 Days, which means if you place your home on the market and you don’t get an acceptable offer on it within say 3 weeks, then your home is way overpriced.
Winter is coming! One of the best ways to take the chill off in Massachusetts is to have a home with a fireplace. It can be woodburning, gas, a pellet stove or even electric, as long as it produces heat. You can see all the homes for sale on the North Shore that feature fireplaces to keep you warm.
Go to: Homes for sale on the North Shore that have fireplaces.
The National Association of Realtors (NAR) released the results of their latest Existing Home Sales Report which revealed that sales rose 0.7% month-over-month, but remain 1.5% lower than they were a year ago. Some may look at these numbers and think that now is not a good time to sell their house, but in fact, the opposite is true.
The national slowdown in sales is directly tied to a lack of inventory available for the buyers who are out in the market looking for their dream homes! The inventory of homes for sale has fallen year-over-year for the last 28 months and has had an upward impact on home prices.
Read the rest of the article here:
There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide:
– Greater exposure to more buyer
– The skills of a professional negotiator
– A layer of protection from possible legal liabilities
– Professional guidance in navigating any pitfalls that may arise
– A level of safety while showing the home
There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable?
Read the complete article at: http://www.simplifyingthemarket.com/en/2017/10/19/hiring-an-agent-to-sell-your-house-may-cost-you-nothing/?a=40880-a4030ecc48da1008339ebad0efc105f2