WHERE DID ALL THE HOUSES GO??
That’s the big question right now. The inventory is so low it’s deeply affecting our buyer clients ability to find and buy a house. In fact, it’s appears to be affecting the level of demand and homes that are beings sold in that, if there were more homes available, that more would be sold. Unfortunately, of what is available, there isn’t a lot that buyers love. Let’s take a look at the details. . .
DEMAND: Demand is in a very interesting “predicament”. I say that because the buyers are out there, the demand is there, however the homes are not. For every “A+” home, there may be as many as 2-3 buyers for the house, at least it feels that way to us. If there were more A+ homes to buy, the demand numbers would probably be higher. Of the offers we’ve written in the last 4 weeks, just about every one of them is a multiple offer situation. This is great news for Sellers, however it is not fun for Buyers. Our clients are having to move very, very quickly to go see a property and even then, it’s almost a given that there will be more than one offer on the home. The other issue this is creating is one we saw this time last year too which is appraisals. We are seeing many properties having the appraisal come in lower than the agreed upon price. Most of the time, if the buyer wants to buy the home, then they have to bring some money to the table and usually split the difference with the sellers. While this is not ideal and it really bugs us, it’s reality and the conditions of the market.
SUPPLY & INVENTORY ACCUM: The supply of homes continues to run about 33% below last years levels, which is really low, under 5 months of inventory. (The measurement “unit” we use is in months. Meaning, if no new homes came on the market today, we’d be out of homes to sell in less than 5 months.) Today, April 1st, there are less than 2600 homes for sale. While that may seem like a lot, compared to what it has been and given the demand it is not enough. Overall, prices have not come up enough to encourage those on the fence about selling to put their home on the market. That may take another year to two at the most and it’s my belief that we will continue to run lean on inventory for that year to two years.
Actually, if you break the area’s up by school district, the numbers are even more drastic. In the West Chester area, for homes between $200 – $500k there is only about 2 months of inventory. In the Downingtown area, its about 3 months. If you are a buyer, this is making life VERY difficult.
SALE TO LIST PRICE RATIO:This number continues to hover around 95%. As I’ve said before, this is a very healthy number. In the more “desirable” area’s like West Chester and Downingtown, the ratio is more around 97%. This is great news for home owners and sellers as it means prices will be rising again this year. For Buyer’s it means that there is little room for negotiation on price and that interest rates, which will be headed up soon, are very important.
RATES: The average rate we are seeing right now is around 4.5% give or take and dependent on what program is being used. For FHA it could be as low as 4.25%. These are still AH-MAY-ZING rates and if you are waiting for a “sign” to buy a house, that should be it. In fact, the FED has pretty much said that they will be taking steps that will cause the rates, in response, to head up more towards 5%, possibly more. That 0.5% difference costs roughly $72 per month on a loan of $300k, or $57 per month at $200k. So if you can buy today and are ready, do it, don’t wait. It will save you at least $70 per month or $840 per year. Possibly more.
CONCLUSION: The market is not a friendly place for buyers. However, prices are still good and they have not taken a drastic upturn. So if you are looking for something that is readily available, then it’s a great time to buy. If you are looking for something that is harder to find normally, it’s going to be very difficult. With that said, just because it might be harder than a few years ago, doesn’t mean it’s worth it. I am still seeing clients find amazing homes for great prices and with a very low interest rate. For sellers, it’s always nice to see people fighting over you and your home. It’s just a matter of making sure appraisals come through and preparing our clients for what happens if they don’t come through at value. Of course, all of this underscores the importance of having the very best Realtor next to you to help you understand all that is going on. If that’s you, we would love to chance to earn your business.
Want to see updated graphs like in previous months? Email us and let us know you miss them! We want to be good stewards of our time and depending on the demand, we may leave the other graphs out. . .